CFA Level I · CFA Level I Exam · Equity Analyst Research Reports
A research report supports a Buy rating mainly by citing only the analyst's most optimistic revenue scenario and does not mention the downside case that the analyst also modeled. Which research quality problem does this most likely illustrate?
This most likely illustrates selective presentation of information, which weakens objectivity. By showing only the optimistic scenario and leaving out the modeled downside, the report gives readers a one-sided view of risk and return, so the Buy rating is not fairly supported.
- AExcessive diversification of data sources
- BSelective presentation of information that weakens objectivityCorrect
- CAppropriate use of a base-case assumption
Explanation
Omitting a modeled downside case while showing only the optimistic one presents the evidence in a one-sided way, which reduces balance and objectivity. A base case would be a balanced central estimate, not the most optimistic one.
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