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NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

A research report states that a company's revenue 'will certainly double in two years' and the stock 'cannot fall'. Which quality of a good research report is most clearly violated?

The report violates the requirement of reasonableness and fairness, because it guarantees outcomes and denies any downside. Forecasts are inherently uncertain, and exaggerated or misleading claims prevent investors from understanding the real risks involved.

  1. AUse of a standard format
  2. BReasonableness and avoidance of guarantees or misleading, exaggerated claimsCorrect
  3. CInclusion of the analyst's name
  4. DUse of charts

Explanation

Forecasts are uncertain, and guaranteeing outcomes or claiming no downside is misleading and not a reasonable, fair statement. Format, naming the analyst and charts are not the issue here.

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