THE ULTIMATE FINRA SERIES 7 PRACTICE EXAM
QUESTION WITH ANSWERS& DETAILED
RATIONALES
SERIES 7 PRACTICE EXAM (QUESTIONS 1–75)
SECTION 1: SEEKS BUSINESS FOR THE BROKER-DEALER (F1)
1. A registered representative is hosting a seminar for potential clients at a local
community center. Which of the following activities is permitted under FINRA
rules?
• A. Offering attendees a chance to win a drawing for a $100 gift card for
providing their contact information
• B. Providing attendees with a detailed analysis of a specific stock's past
performance
• C. Selling non-cash gifts valued at $150 to attendees
• D. Making a verbal presentation about the firm's services without pre-
approval from a principal
Answer: B. Providing attendees with a detailed analysis of a specific stock's past
performance
Rationale: FINRA rules permit providing factual information, including past
performance analyses, as long as it is not misleading. Offering gifts valued over
$100 (cash or non-cash) as an inducement for business is not permitted, and
presentations made to the public are generally considered retail communications
requiring principal approval.
,2. A customer is interested in learning more about a new initial public offering
(IPO) the firm is underwriting. The registered representative may provide the
customer with a prospectus when:
• A. The customer makes an oral request
• B. The customer's Financial Industry Regulatory Authority (FINRA)
registration is verified
• C. The customer signs a letter of intent to purchase the security
• D. The representative receives the final prospectus and it is delivered
Answer: D. The representative receives the final prospectus and it is delivered
Rationale: A prospectus must be delivered to a customer before or at the time of
sale. A final prospectus is required, not a preliminary one. The customer can make
an oral request, but delivery must be made and documented.
3. An RR receives an order from a new customer over the phone. What must the
RR do before executing the trade?
• A. Obtain a signed suitability form from the customer
• B. Request that the customer provide written confirmation of the order
• C. Promptly enter the order and obtain written approval from a principal
• D. Ensure the firm has a valid customer account agreement
Answer: C. Promptly enter the order and obtain written approval from a
principal
Rationale: Under FINRA rules, for a new customer, the representative must obtain
written approval from a principal for any transaction before or immediately after
the trade. This is part of the firm's suitability obligations.
4. A registered representative is cold-calling potential customers. Which
statement is true regarding the Do Not Call Registry?
• A. The RR may call numbers on the registry if they have a prior business
relationship
, • B. The RR must check the registry only once per quarter
• C. Calling a number on the registry is always prohibited
• D. The RR is exempt if the call is for a charitable purpose
Answer: A. The RR may call numbers on the registry if they have a prior business
relationship
Rationale: The national Do Not Call Registry allows calls to numbers on the list if
there is an established business relationship or if the consumer has given prior
consent. Calls for charitable purposes are not exempt from the registry rules.
5. A customer asks for a recommendation for a growth stock. The RR should
base the recommendation on:
• A. The firm's proprietary research
• B. The customer's investment objectives and risk tolerance
• C. The stock's recent performance
• D. The analyst's consensus rating
Answer: B. The customer's investment objectives and risk tolerance
Rationale: Suitability is the foundation of any recommendation. The
representative must evaluate the customer's financial profile, objectives, and risk
tolerance before suggesting any product. Recommendations must be suitable for
the customer, not based solely on firm research or analyst opinions.
SECTION 2: OPENS ACCOUNTS AFTER OBTAINING AND EVALUATING
CUSTOMERS’ FINANCIAL PROFILE AND INVESTMENT OBJECTIVES (F2) (Questions
6–15)
6. A customer wishes to open an account with the firm. The RR must obtain all of
the following information except:
• A. Social Security number
• B. Investment objectives
, • C. Net worth
• D. Credit score
Answer: D. Credit score
Rationale: The RR must obtain a customer's financial profile, including investment
objectives, net worth, and Social Security number. A credit score is generally not
required to open a brokerage account and is not part of the standard onboarding
information under FINRA rules.
7. A customer age 55, with a low risk tolerance and a need for income, should be
recommended which of the following?
• A. Growth stock
• B. High-yield bond fund
• C. U.S. Treasury bond
• D. International emerging markets fund
Answer: C. U.S. Treasury bond
Rationale: U.S. Treasury bonds are considered low-risk and provide a fixed income
stream, aligning with the customer's low risk tolerance and need for income.
Growth stocks and emerging markets funds are volatile, and high-yield bonds
carry credit risk.
8. A married couple opens a joint account. What information must be obtained?
• A. Both spouses' tax returns
• B. Both spouses' signatures on the account agreement
• C. Only one spouse's net worth
• D. A copy of the couple's marriage certificate
Answer: B. Both spouses' signatures on the account agreement
Rationale: Both parties must sign the account agreement to open a joint account.
Tax returns are not required, and net worth for both must be considered.
QUESTION WITH ANSWERS& DETAILED
RATIONALES
SERIES 7 PRACTICE EXAM (QUESTIONS 1–75)
SECTION 1: SEEKS BUSINESS FOR THE BROKER-DEALER (F1)
1. A registered representative is hosting a seminar for potential clients at a local
community center. Which of the following activities is permitted under FINRA
rules?
• A. Offering attendees a chance to win a drawing for a $100 gift card for
providing their contact information
• B. Providing attendees with a detailed analysis of a specific stock's past
performance
• C. Selling non-cash gifts valued at $150 to attendees
• D. Making a verbal presentation about the firm's services without pre-
approval from a principal
Answer: B. Providing attendees with a detailed analysis of a specific stock's past
performance
Rationale: FINRA rules permit providing factual information, including past
performance analyses, as long as it is not misleading. Offering gifts valued over
$100 (cash or non-cash) as an inducement for business is not permitted, and
presentations made to the public are generally considered retail communications
requiring principal approval.
,2. A customer is interested in learning more about a new initial public offering
(IPO) the firm is underwriting. The registered representative may provide the
customer with a prospectus when:
• A. The customer makes an oral request
• B. The customer's Financial Industry Regulatory Authority (FINRA)
registration is verified
• C. The customer signs a letter of intent to purchase the security
• D. The representative receives the final prospectus and it is delivered
Answer: D. The representative receives the final prospectus and it is delivered
Rationale: A prospectus must be delivered to a customer before or at the time of
sale. A final prospectus is required, not a preliminary one. The customer can make
an oral request, but delivery must be made and documented.
3. An RR receives an order from a new customer over the phone. What must the
RR do before executing the trade?
• A. Obtain a signed suitability form from the customer
• B. Request that the customer provide written confirmation of the order
• C. Promptly enter the order and obtain written approval from a principal
• D. Ensure the firm has a valid customer account agreement
Answer: C. Promptly enter the order and obtain written approval from a
principal
Rationale: Under FINRA rules, for a new customer, the representative must obtain
written approval from a principal for any transaction before or immediately after
the trade. This is part of the firm's suitability obligations.
4. A registered representative is cold-calling potential customers. Which
statement is true regarding the Do Not Call Registry?
• A. The RR may call numbers on the registry if they have a prior business
relationship
, • B. The RR must check the registry only once per quarter
• C. Calling a number on the registry is always prohibited
• D. The RR is exempt if the call is for a charitable purpose
Answer: A. The RR may call numbers on the registry if they have a prior business
relationship
Rationale: The national Do Not Call Registry allows calls to numbers on the list if
there is an established business relationship or if the consumer has given prior
consent. Calls for charitable purposes are not exempt from the registry rules.
5. A customer asks for a recommendation for a growth stock. The RR should
base the recommendation on:
• A. The firm's proprietary research
• B. The customer's investment objectives and risk tolerance
• C. The stock's recent performance
• D. The analyst's consensus rating
Answer: B. The customer's investment objectives and risk tolerance
Rationale: Suitability is the foundation of any recommendation. The
representative must evaluate the customer's financial profile, objectives, and risk
tolerance before suggesting any product. Recommendations must be suitable for
the customer, not based solely on firm research or analyst opinions.
SECTION 2: OPENS ACCOUNTS AFTER OBTAINING AND EVALUATING
CUSTOMERS’ FINANCIAL PROFILE AND INVESTMENT OBJECTIVES (F2) (Questions
6–15)
6. A customer wishes to open an account with the firm. The RR must obtain all of
the following information except:
• A. Social Security number
• B. Investment objectives
, • C. Net worth
• D. Credit score
Answer: D. Credit score
Rationale: The RR must obtain a customer's financial profile, including investment
objectives, net worth, and Social Security number. A credit score is generally not
required to open a brokerage account and is not part of the standard onboarding
information under FINRA rules.
7. A customer age 55, with a low risk tolerance and a need for income, should be
recommended which of the following?
• A. Growth stock
• B. High-yield bond fund
• C. U.S. Treasury bond
• D. International emerging markets fund
Answer: C. U.S. Treasury bond
Rationale: U.S. Treasury bonds are considered low-risk and provide a fixed income
stream, aligning with the customer's low risk tolerance and need for income.
Growth stocks and emerging markets funds are volatile, and high-yield bonds
carry credit risk.
8. A married couple opens a joint account. What information must be obtained?
• A. Both spouses' tax returns
• B. Both spouses' signatures on the account agreement
• C. Only one spouse's net worth
• D. A copy of the couple's marriage certificate
Answer: B. Both spouses' signatures on the account agreement
Rationale: Both parties must sign the account agreement to open a joint account.
Tax returns are not required, and net worth for both must be considered.
