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

Which of the following is an example of a conflict of interest that a research analyst must disclose in a research report?

An analyst or associate holding a financial interest above the specified threshold, such as more than 1%, in the subject company is a conflict of interest requiring disclosure in the report. Using public data, DCF valuation or compliance review creates no conflict.

  1. AThe analyst has used publicly available annual reports of the company
  2. BThe analyst or an associate holds financial interest of more than 1% in the subject companyCorrect
  3. CThe report uses a discounted cash flow method for valuation
  4. DThe report has been reviewed by the analyst's compliance officer

Explanation

Holdings of the analyst or associates in the subject company, beyond the specified threshold such as 1% of the company's securities, create a conflict of interest and must be disclosed. Using public data, a DCF method or compliance review is not a conflict.

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