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B. Communication with Clients and Prospective Clients.
#analyst-notes #code-of-ethics-and-standards-of-professional-conduct #v.-investment-analysis-recommendations-and-actions

You must:
  • Disclose to clients the basic format and general principles of the investment processes used to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes.
  • Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.
  • Distinguish between fact and opinion in the presentation of investment analysis and recommendations.

All important factors relating to the investment recommendation must be included in the report. You must include known limitations in the analysis and conclusions in the report and consider all risks associated with the investment.

Members should consider including the following information in research reports:

  • Expected annual rate of return, taking into account cash flows and expected price changes during the holding period.
  • Annual amount of income expected (current and future).
  • Current rate of income return or yield to maturity.
  • Degree of uncertainty associated with cash flows.
  • Degree of marketability / liquidity.
  • Business, financial, political, sovereign, and market risks.

A report can be given in many forms: a written report, in-person communication, telephone conversation, media broadcast, or transmission by computer (e.g., on the Internet or by email).

Opinions should be distinguished clearly from facts. Specifically:

  • Past should be separated from future. Past represents facts, while forecast on future represents opinions.
  • In the case of quantitative analysis, facts should be separated from statistical conjecture.

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