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Series 7: Seeks Business for the Broker-Dealer
Series 7 practice questionmediumCommunications with the Public (Retail and Institutional) — Hypothetical Illustrations

A registered representative wants to use a hypothetical illustration of a variable life policy in a presentation. Which of the following is required for compliance?

  1. AOnly average returns must be shown
  2. BIllustrations may only show positive performance scenarios
  3. CIt must also show the impact of maximum charges and fees✓ Correct answer
  4. DHypothetical illustrations are prohibited
Explanation

Why CIt must also show the impact of maximum charges and fees

FINRA requires that hypothetical illustrations for variable products include the maximum possible charges and fees to ensure fair presentation.

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