SIE Exam Question 12: Answer and Explanation

Question: 12

Which of the following items are required in a research report that contains ratings?

• A. The meaning of each rating must be defined.
• B. The percentage of all securities rated by the member to which the member would assign a “buy,” “hold/neutral,” or “sell” rating must be disclosed.
• C. The member must disclose the percentage of subject companies within the “buy,” “hold/neutral,” and “sell” ratings for whom the member has provided investment banking services within the previous 12 months.
• D. All of the above.

Correct Answer: D

Explanation:

A research report that contains ratings must define the meaning of each rating; the percentage of all securities rated by the member to which the member would assign a "buy," "hold/neutral," or "sell" rating must be disclosed; and the member must disclose the percentage of subject companies within the "buy," "hold/neutral," and "sell" ratings for whom the member has provided investment banking services within the previous 12 months.