Downgrade Warning Term Paper Example | Topics and Well Written Essays - 500 words

Downgrade Warning - Term Paper ExampleAccording to the report J.P. Morgan Tells Analysts To Warn of a Downgrade analysts independence is negatively touched when it needs to clearly communicate to the company and the client banker the reason behind specific stock recommendations. Analysts are warned from conducting negative research and some firms penalize investors for recommending change options. What exactly does Peter Houghtons memo say? Does the memo say that analysts should compromise their independence? How does the memo raise questions about analysts independence? Does it make any inequality whether analysts arent pressured to change recommendations, but only to make factual changes?Ans) The memo of Peter Houghton does not directly point to analysts independence. The memo states that analysts should consult the company and the client banker originally making recommendations to an investor. Also the analyst should either accept the request of the research note recommended by the firm or should clearly communicate to the firm as to why it cannot follow those recommendations. Yes, there is difference between asking analyst to change recommendations and making factual changes. What are the buy place and sell side? Why might the sell side be unwilling to make sell recommendations on stocks? If the buy side has its own analysts, would the buy side perpetually look at sell side analysts reports?Ans) The buy side and the sell side are the two types of analysts. Sell recommendation is considered as a dowery of negative research which affects the firm negatively so the sell recommendation on stocks is viewed in a negative manner. Sell-side analysts typically work for full-service broker-dealers and make recommendations on the securities they cover. Buy-side analysts typically work for institutional money managers that purchase securities for their own accounts (Analyzing Analyst Recommendations para. 6). Why might sell