According to Standard IV (A.2), members should consider including the following information in research reports, except:
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A. B. C. D. E. F. G. H.A
All the information has to be included in the research reports except the methodology that drove the investment decision, which is part of the 'maintaining files' compliance procedure for Standard IV (A.1).
According to Standard IV (A.2) of the CFA® Level 1 curriculum, members are required to provide certain information in their research reports. This standard emphasizes the importance of providing accurate, clear, and complete information to clients or prospective clients. It helps ensure that investment recommendations are based on sound analysis and that clients are able to make informed decisions.
In this particular question, we are asked to identify the item that should not be included in research reports according to Standard IV (A.2). Let's go through each option to determine which one does not align with the standard:
A. The methodology that drove the investment decisions: This information should be included in research reports. Members should provide details about the methodology they used to arrive at their investment decisions. This helps clients understand the basis for the recommendations and evaluate the quality of the analysis.
B. Yield-to-maturity: Yield-to-maturity is a key measure used to assess the return on fixed-income investments. This information is relevant and useful for clients when evaluating the attractiveness of fixed-income securities. Therefore, it should be included in research reports.
C. Annual amount of income expected: The annual amount of income expected from an investment is an important consideration for clients, particularly for income-focused investors. Including this information in research reports allows clients to assess the income-generating potential of an investment and make informed decisions. Therefore, it should be included.
D. Degree of uncertainty associated with the cash flows: Assessing the degree of uncertainty associated with cash flows is crucial for evaluating the riskiness of an investment. This information helps clients understand the potential variability in future cash flows and make informed decisions. Therefore, it should be included in research reports.
E. Business, financial, political, sovereign, and market risks: Identifying and assessing risks is a fundamental aspect of investment analysis. Members should include information about various risks, such as business, financial, political, sovereign, and market risks. This allows clients to understand the potential challenges and uncertainties associated with an investment. Therefore, it should be included.
G. Degree of marketability/liquidity: The degree of marketability or liquidity is an important factor to consider when evaluating an investment. It indicates how easily an investment can be bought or sold in the market without significantly impacting its price. Including information about marketability/liquidity is important for clients to assess the potential challenges or restrictions they may face when buying or selling the investment. Therefore, it should be included.
H. Expected annual rate of return: The expected annual rate of return is a crucial piece of information for clients when evaluating the potential profitability of an investment. It allows them to assess the attractiveness of an investment in comparison to other alternatives. Therefore, it should be included in research reports.
Considering the explanations above, it can be concluded that option F, "none of these answers," is the correct answer. All the information mentioned in options A to H should be included in research reports according to Standard IV (A.2).