CFA Level I · CFA Level I Exam · Guidance for Standard V: Investment Analysis, Recommendations, and Actions
An analyst at an advisory firm writes a research report that contains both audited historical earnings figures and her own forecast that the company's margins will widen over the next three years. Under Standard V(B), the analyst is most likely required to:
The analyst must clearly separate fact from opinion. Audited historical earnings are facts, while the margin forecast is her opinion. Standard V(B) requires that distinction so readers can evaluate the report, and it does not ban forecasts or require everything to be labelled opinion.
- Aclearly distinguish the historical figures as fact from the margin forecast as opinion.Correct
- Bpresent only the audited figures, because forecasts cannot be included in a report.
- Clabel every sentence in the report as an opinion to avoid misleading readers.
Explanation
Standard V(B) requires members and candidates to distinguish between fact and opinion in the presentation of analysis and recommendations. Audited results are fact and the margin forecast is opinion. Forecasts are permitted if identified as such, and labelling everything as opinion would blur the distinction.
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