- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 7. Company Analysis: Forecasting
- Subject 1. Forecast Objects, Principles, and Approaches
CFA Practice Question
The default forecast approach for any object is:
B. Historical base rates and convergence
C. Management guidance
D. Analyst's discretionary forecast
A. Historical results
B. Historical base rates and convergence
C. Management guidance
D. Analyst's discretionary forecast
Correct Answer: A
This is also the easiest one. It is appropriate for companies operating in mature industries where the analyst does not expect the industry structure ti change and for companies with low sensitivity to the business cycle.
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