FINRA Series 7 (General Securities Representative) practice test

300

practice questions

20

free, no signup

72%

practice target

100

questions per simulation

1. Q1Communications with the public

   A registered representative prepares a new retail communication about a mutual fund and plans to send it to 200 prospective customers. What must the firm generally do before the piece is used?

   1. ARely on the fund's prospectus as automatic approval
   2. BFile it with FINRA at least 30 days before every use
   3. CObtain approval from a registered principal
   4. DHave any registered representative sign the piece
   Show answer

   C. Obtain approval from a registered principal FINRA Rule 2210 treats a piece sent to more than 25 retail investors in 30 days as a retail communication. A registered principal must approve it before use, and the firm must keep records of the approval and the materials. Filing with FINRA is required only for certain communications, such as new products or those subject to specific filing requirements, not for every piece.

2. Q2Communications with the public

   Which written communication is classified as correspondence under FINRA Rule 2210?

   1. AAn email to 20 retail prospects in 30 days
   2. BA brochure mailed to 500 retail customers during a single month
   3. CA press release distributed to national media outlets
   4. DA website post available to any retail investor
   Show answer

   A. An email to 20 retail prospects in 30 days Correspondence is a written communication sent to 25 or fewer retail investors within any 30-calendar-day period. A message to 20 prospects fits that limit. A website post available to the public and a brochure sent to 500 customers are retail communications because they reach more than 25 retail investors. Press releases are generally treated as public communications rather than one-to-one correspondence.

3. Q3Communications with the public

   What is the purpose of the options disclosure document (ODD) that a customer receives?

   1. AIt states the specific price at which the customer should buy the option contract
   2. BIt reports the issuer's quarterly earnings and dividend history for the underlying stock
   3. CIt describes the past performance of the representative recommending the trade
   4. DIt explains the risks and characteristics of standardized options
   Show answer

   D. It explains the risks and characteristics of standardized options The options disclosure document is a risk-disclosure document describing the characteristics and risks of standardized options. It does not recommend a specific trade, does not set a price, and does not report an issuer's financial results. FINRA Rule 2360 requires the firm to deliver the current ODD before the customer's first options transaction and to obtain the customer's acknowledgment of receipt.

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