Research Objectivity and Compensation Arrangements

Hard Research Objectivity Standards Compensation Arrangements

As a research analyst, you receive a performance bonus that is tied directly to the short-term performance of the investments you recommend. This compensation arrangement raises concerns regarding your objectivity when conducting your research. According to the CFA Institute's Research Objectivity Standards, which of the following statements BEST describes the ethical implications of your compensation arrangement?

The arrangement is acceptable as long as you disclose the bonus to your clients in your reports.

The arrangement compromises your research integrity, as it creates a conflict of interest that can bias your recommendations.

The arrangement is ethical since performance-based pay aligns your interests with those of your clients.

Hint

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