CFA Level I · CFA Level I Exam · Introduction to Equity Valuation
An analyst's equity research report is intended to be useful to its readers. Which of the following elements is most likely essential in a research report that communicates valuation results?
A clear, balanced presentation of risks is essential. Readers need to understand the assumptions, uncertainties and factors that could invalidate the valuation. A guaranteed target price is misleading because valuation is uncertain, and listing only personal holdings is a disclosure, not a communication of results.
- AA guaranteed target price
- BClear, balanced presentation of risksCorrect
- CA list of the analyst's personal holdings only
Explanation
A good research report presents the thesis, valuation and the risks and limitations of the analysis in a balanced way so readers can judge the conclusion. Guaranteeing a price is impossible and misleading. Personal holdings alone are a disclosure item and do not communicate valuation results.
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