medium · CFA Level I ethics
An analyst at Amberfen Pharma uses a proprietary 15-year DCF model to value a drug pipeline. The model relies heavily on a third-party laboratory's clinical trial success estimates. The analyst reviews the laboratory’s methodology, discovers it is based on a limited 3-year sample size, but uses the data anyway without mentioning this limitation in the research report. The report states, "The drug is valued at $45.00 based on its high probability of FDA approval."
Which Standard is the analyst most likely violating by failing to disclose the sample size limitation?
- Standard V(C) Record Retention.
- Standard VI(A) Disclosure of Conflicts.
- Standard V(B) Communication with Clients and Prospective Clients.
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