CFA Level I · CFA Level I Exam · Equity Analyst Research Reports
An analyst's report uses a sensitivity analysis on the valuation. This analysis is best described as:
Sensitivity analysis changes one key input at a time, such as the growth rate or discount rate, to see how the estimated value responds. It differs from scenario analysis, which assigns probabilities to complete sets of assumptions, and it does not replace the model with the market price.
- AChanging one key input at a time to see how the estimated value changesCorrect
- BAssigning probabilities to several complete sets of assumptions
- CReplacing the valuation model with the market price
Explanation
Sensitivity analysis varies one input (such as growth or the discount rate) at a time while holding others constant. Assigning probabilities to full sets of assumptions is scenario analysis.
Did you get it right without looking?
One question tells you little. A timed set on Equity Analyst Research Reports shows your real accuracy, how long you take and where you lose marks.
More Equity Analyst Research Reports questions
- Two analysts at different firms both issue Buy ratings on the same stock, but one firm uses a relative-rating scheme and the other an absolu…
- An analyst's report includes a risks and valuation-uncertainty section. The inclusion of this section is most likely intended to:
- Which feature of a research report's recommendation section would an investor most likely view as strengthening the credibility of the inves…
- A report's price target rests on a forecast of 25% annual revenue growth for ten years, which is far above the industry's historical range, …
- An analyst's employer is the lead underwriter for a company's upcoming bond issue. The analyst covers the company's equity and is aware of t…
- An equity research report is most likely intended to serve which primary purpose for its readers?