Question

Which of the following is not a reason analyst recommendations are often more optimistic than warranted by an objective analysis of the facts?

A) Many analysts fail to grasp the gravity of the problems facing a company.
B) Sell recommendations generate lower commissions than buy recommendations.
C) The firms for which analysts work may have lucrative investment banking relationships with the firm.
D) Analysts are often pressured by their superiors to overlook negative information.

Answer 1

B

Step-by-step explanation:

Analysts are involved in the assessment and evaluation of a business' risk and the report provided to relevant stakeholders.

The work of an analyst can be biased compared to an objective analysis due to certain factors.

Due to large of adequate knowledge or preparation , an analyst may fail to grasp the gravity of the problems facing a company. There may also be a lucrative investment banking relationship with the firms , hence the risks involved are not exposed early.

Another point is subjectivity , where an analyst is pressured to overlook negative information in order to provide an impressive information about its client