CFA Level I · CFA Level I Exam · Equity Analyst Research Reports
An equity research report is most likely to include a section on investment risks because:
A research report includes a risks section so readers can judge what could make the recommendation fail. It identifies factors that may undermine the analyst's forecasts or valuation. It supplements the valuation and price target rather than replacing them, which remain core components.
- Ait lets the analyst avoid stating a valuation
- Bit helps readers judge what could make the recommendation failCorrect
- Cit replaces the need for a stated price target
Explanation
A risks section identifies factors that could cause the analyst's thesis, forecasts or valuation to prove wrong, so readers can weigh the recommendation. It does not remove the need for a valuation or a price target, which remain core parts of the report.
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