CFA Practice Question

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CFA Practice Question

In terms of Standard V(B), which of the following is a factor that does not need to be included in an analyst's research report?

A. annual expected income
B. degree of uncertainty
C. monthly income projections

The following factors should be included in an analyst's research report:
• expected annual rates of return
• annual expected income
• current rate of income
• degree of uncertainty
• degree of marketability / liquidity
• other risks

User Comment
fding as to time, only "annual" and "current"
danlan2 In a whole, risk and return.
DonDon Why not include Monthly income projections considering those are are cash flows?
bobert I figured that if you have annual expected income and monthly income projections, that expected and projected are basically the same thing, future forecasts. Why would you need a monthly figure if you can divide the yearly by 12?
studyprep Monthly income projection is not that easy. You could make an average as bobert said above. But that would not be a true monthly income projection. (it is not a monthly salary that you see on the payslip.)
NikolaZ Rates of return are always given in annual projections due to the simple fact that it is too difficult to predict monthly projections (changing nature of market, seasonal). Not even the best analyst can guarantee or even come close to predict what you will get in return monthly. Thus, doing so is misrepresenting information and making rash assumptions. You cannot divide by 12 either, because you are likely to make more money in one month than another. Depends on the stock as well, some stocks tend to perform much better during certain periods of the year.
nabilhjeily dr nicolas...excellent
johntan1979 bobert, your argument is not sound. I can also ask you the same thing... why would you need an annual figure if you can add up the monthly projections?

And I disagree with NikolaZ's argument as well. Most of the multinational companies I worked for makes monthly projections, sometimes weekly!

The ONLY reason why the answer is C is because CFA Institute's Standard V(B) says so.
eddington I think C is wrong because a income projections are opinion and not fact regardless of whether they are annual or monthly
xefor Eddington is quite right. Projections are an opinion based on a model. In our reports we must distinguish between fact and opinion.
marianne1 See above what you be included in the report