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NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

Under the SEBI (Research Analysts) Regulations, 2014, which of the following practices best reflects the quality of 'objectivity' in a research report?

Objectivity means the recommendation is built on disclosed data and sound reasoning, and any conflict of interest with the subject company is disclosed. Blanket Buy ratings, hidden risks or unverified management projections compromise independence and make the report unreliable for investors.

  1. AGiving a Buy rating to every stock covered by the employer's investment banking division
  2. BBasing the recommendation on disclosed data and reasoning, and disclosing any conflict of interest with the subject companyCorrect
  3. COmitting the risks to the target price so that the report stays short
  4. DUsing the issuer's management projections without any verification

Explanation

An objective report rests on verifiable data and reasoned analysis, and discloses conflicts of interest so readers can judge bias. Rating every stock Buy because of banking ties, hiding risks, or accepting management numbers blindly all undermine objectivity.

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