NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report
Which practice best shows that a research report meets the standard of a clearly stated and reasoned recommendation?
A reasoned recommendation states the rating, the target price, the time horizon and the key assumptions and valuation method behind them. This lets readers understand and test the logic and track outcomes. Unexplained ratings or selective quotes of other estimates do not meet this standard.
- AGiving a rating without explaining the valuation method
- BStating the rating, target price, time horizon and the assumptions behind themCorrect
- CChanging the rating without telling readers the reason
- DQuoting only the highest price estimate from other brokers
Explanation
A reasoned recommendation links the rating to a target price, a time horizon and explicit assumptions, enabling readers to evaluate and monitor it. The other options hide the logic or are selective.
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