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

Which of the following should a good research report include regarding risks to its recommendation?

A good research report should discuss the key factors that could cause actual results to differ from the analyst's forecasts, such as regulatory, cost or demand risks. Generic statements, selective disclosure or skipping risks for Buy ratings do not give readers a balanced and useful assessment.

  1. AOnly risks that management has already disclosed in its annual report
  2. BA discussion of key factors that could cause actual results to differ from the analyst's forecastsCorrect
  3. CNo risk discussion if the rating is Buy
  4. DA generic statement that all investments carry risk

Explanation

A good report identifies specific risks, such as regulation, input costs or demand, that could make outcomes differ from forecasts. Generic or selective statements and omission for Buy ratings do not give readers a balanced view.

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