An analyst receives a report from his research department that summarizes and interprets a recent speech from the chairman of the U.S. Federal Reserve. The summary says that the chairman thinks inflation is under control. Based upon this summary, the analyst says in his next newsletter that inflation is under control. This is a violation of:
A) Standard V(A), Diligence and Reasonable Basis, only.
B) Standard V(A), Diligence and Reasonable Basis, and Standard V(B), Communication with Clients and Prospective Clients.
C) none of the Standards listed here.
My question– There is nothing clue about the violation of communication with clients and prospective clients. The explanation of the also did not provide any justification about its violation. Sir, please help me out giving your insight. The explanation is:
Explanation
The analyst should verify that the research department has interpreted the chairman’s speech correctly. The analyst must make it clear that the statement concerning inflation is only an opinion. No one knows if that is true or not at any point in time. Based upon the given information, we cannot say that the analyst is violating only one standard. The analyst may also be violating plagiarism in accordance with Standard I(C), Misrepresentation. Hence, the answer citing the two standards and not limiting violations to just those two standards is the best answer.
1) when we talk about reasonable and diligent basis, it means that the analyst just cannot rely upon the summary prepared by the research department…it should investigate into its accuracy and thoroughness which is not the case here..hece a violation
2) In regards communication with clients and prospective clients, the analsyst is supposed to distinguish between facts and opinion.Whether inflation will remain under control or not cannot be a fact …its an opinion but the analyst is stating that as a fact…hence a violation