Series 7 practice questionmediumCommunications with the Public (Retail and Institutional) — Misleading Statements
A broker-dealer creates a brochure that claims their mutual fund "guarantees above-market returns." Why is this statement problematic?
- AIt is a prohibited performance guarantee✓ Correct answer
- BIt is allowed if past performance supports the claim
- CIt is an opinion, not a fact
- DIt is a forward-looking statement
Explanation
Why A — It is a prohibited performance guarantee
FINRA prohibits broker-dealers from making guarantees of specific returns or outcomes, as this is misleading regardless of past performance.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Seeks Business for the Broker-Dealer questions
- Which of the following best describes an 'institutional communication' under FINRA rules?
- A registered representative wants to share a client testimonial on her firm's official LinkedIn page. Which of the…
- A registered representative wants to send a mutual fund research report to 30 retail clients. What is required before…
- When a broker-dealer uses a testimonial in advertising, what must be disclosed according to FINRA rules?