Skip to content

NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Research Analyst Profession

Analyst Meera values Shakti Auto at a fair value of ₹480 per share and a stock trades at ₹400. She says the stock is undervalued and a buy. A client asks what additional element must a compliant research report contain alongside such a recommendation. Which is most appropriate?

A compliant report must back the buy recommendation with its rationale, valuation basis and key risks, and carry the required disclosures on holdings, compensation and conflicts. Guaranteeing returns is prohibited, and client names are confidential and irrelevant.

  1. AA guarantee of minimum return of 20% over twelve months
  2. BThe rationale, valuation basis, key risks and the required disclosures on holdings and compensationCorrect
  3. COnly the target price, as rationale is confidential
  4. DThe names of other clients who bought the stock

Explanation

Compliant reports must support recommendations with rationale and basis of valuation, mention risks, and include disclosures about interests and compensation. Guaranteeing returns is prohibited, withholding rationale is non-compliant, and client names are confidential.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Research Analyst Profession shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Research Analyst ProfessionFree diagnostic mock

More Introduction to Research Analyst Profession questions