Research Report on Kandy Tea Estate Limited
Kandy Tea Estate Limited
Date: December 2013
Analyst: Murali Premadosa
Chartered Financial Analyst
Recommendation: Long-term buy with associated high commodity risk supported by large growth prospects for Sri Lanka as well as liquidity risk because it is a thinly traded company in a frontier market.
Tea Production by Country (million kilograms)
2008 | 2009 | 2010 | CAGR (2008–2010) | |
India | 980.8 | 979.0E | 966.4E | –0.7% |
Sri Lanka | 318.7 | 290.6 | 331.4. | 2.9% |
Notes: CAGR is compound annual growth rate. Production for India’s production in 2009 and 2010 is estimated.
Sources: Based on data from the India Tea Board and Sri Lanka Tea Board
Q. Prem’s research report in Exhibit 1 least likely violates which CFA Institute Standard of Professional Conduct?
- Use of CFA designation
- Plagiarism
- Communication with Clients
Solution
B is correct. The statistics cited are referenced as being from the India Tea Board and the Sri Lanka Tea Board. Thus, Prem is not trying to pass the information off as his own. However, he has violated Standard VII(B)–Reference to CFA Institute, the CFA Designation, and the CFA Program. Prem is not allowed to use his designation as a title or noun—that is, “Chartered Financial Analyst.” The Chartered Financial Analyst and CFA marks must always be used either after a charterholder’s name or as adjectives (never as nouns) in written documents. Prem also violated Standard V(B)–Communication with Clients and Prospective Clients by citing dated tea production information. As a result, clients are unlikely to be able to follow the reasoning behind his recommendation.
Can anyone explain why not C in better way ?
According to the explanation given what we can understand is communication with clients is violated here because there is no particular reasoning provided here to explain the recommendation the analyst has just cited a table for the same which is not enough .