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CFA Level I · CFA Level I Exam · Guidance for Standard V: Investment Analysis, Recommendations, and Actions

Which of the following is the best example of a team practice that supports a reasonable basis for a group recommendation under Standard V(A)?

The best practice is testing the peer group's appropriateness and the model's limitations before agreeing a view. Standard V(A) calls for diligence, independence and thoroughness, using a balance of resources rather than deferring to seniority or a single outside report.

  1. AAdopting the senior analyst's view without discussing assumptions.
  2. BTesting the appropriateness of the selected peer group and the limitations of the quantitative model before agreeing the view.Correct
  3. CRelying solely on a third-party report because several members already trust it.

Explanation

The guidance lists the appropriateness of peer-group comparisons and the output and potential limitations of quantitative models as attributes to consider. It also calls for a balance of resources, not reliance on one source or on seniority. Options A and C skip independent, thorough analysis.

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