CFA Level I · CFA Level I Exam · Introduction to Equity Valuation
When an analyst acts as a fiduciary adviser rather than a promoter of a security, the analyst's valuation work is most likely required to be:
The work should be independent and objective, with transparent assumptions. Analysts owe users of their research an unbiased opinion, and disclosing the inputs and limitations lets readers judge the conclusion, unlike matching an issuer's preferred price or following the consensus.
- Aaligned with the issuer's preferred price
- Badjusted to match the consensus view
- Cindependent and objective, with transparent assumptionsCorrect
Explanation
Analysts should provide objective, well-supported opinions and communicate the assumptions and limitations behind their conclusions. Aligning with an issuer's price or the consensus compromises independence and ignores the analyst's own judgment.
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