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Seeks Business for the Broker-Dealer from Customers and Potential Customers — Series 7 FINRA practice questions

12 multiple-choice questions and 6 flashcards on Seeks Business for the Broker-Dealer from Customers and Potential Customers, about 3% of the Series 7 FINRA bank. Every one carries a written rationale.

Written and maintained by the CoStudy team · last updated 2026-10-12 · how we write and review questions

What this chapter covers

Seeks Business for the Broker-Dealer from Customers and Potential Customers is one of 9 chapters in CoStudy's Series 7 (FINRA) bank, and it holds 12 of the bank's 480 multiple-choice questions — roughly 3% of the total. That proportion is not arbitrary: chapters follow the certifying body's published exam outline, and the number of questions in each is set by that domain's published weight, so the share of your practice time this chapter takes matches the share of the real exam it accounts for.

Studying by chapter is worth doing once you have a diagnostic score. A single overall percentage tells you whether you are close; it does not tell you which domain is dragging. Working a weak chapter in isolation, and re-testing it in isolation, is the fastest way to move a score that has stalled — and it is why the mock exams in CoStudy report by domain rather than as one number.

Free Seeks Business for the Broker-Dealer from Customers and Potential Customers practice questions

3 questions drawn from this chapter, with the full rationale shown — the controlling principle behind the right answer, and why each wrong option tempts and fails.

A rep sends a form letter promoting an equity fund to 30 retail clients. Under Rule 2210 this is:

  1. Retail communication requiring principal approval
  2. Institutional communication with no filing needed
  3. Correspondence exempt from principal approval rules
  4. Public appearance requiring same-day disclosure

Answer: A — Retail communication requiring principal approval

A) Correct — content sent to more than 25 retail persons in 30 days is retail communication. B) Retail investors don't fit institutional definition. C) Above 25 retail investors becomes retail communication. D) Public appearance is a different category.

Before a public offering's effective date, an underwriter may distribute:

  1. A final prospectus with pricing and terms specified
  2. Only a private placement memo to select clients only
  3. Tombstone ads and a preliminary (red herring) prospectus
  4. Firm research reports containing pricing predictions

Answer: C — Tombstone ads and a preliminary (red herring) prospectus

A) Final prospectus is only after effectiveness. B) That's a private placement, not a public offering. C) Correct — tombstone ads and preliminary prospectus permitted in cooling-off period. D) Research is restricted in the quiet period.

Which of the following would MOST likely violate FINRA's standards for retail communications?

  1. A truthful comparison to a benchmark index with methodology disclosed
  2. A statement guaranteeing a minimum annual return on a variable investment
  3. Balanced disclosure of both risks and benefits of a product
  4. A hyperlink directing readers to the fund's prospectus

Answer: B — A statement guaranteeing a minimum annual return on a variable investment

B) Correct — guaranteeing returns on a variable, market-dependent product is misleading and prohibited. A) A truthful, methodology-disclosed comparison is permitted. C) Balanced risk/benefit disclosure is required, not a violation. D) Linking to the prospectus is a compliant practice.

Seeks Business for the Broker-Dealer from Customers and Potential Customers flashcards

3 cards from the 6 in this chapter.

What is a tombstone ad?

An advertisement announcing a new securities offering. Permitted during the cooling-off period. Contains only basic info (issuer, type, amount) — NOT a solicitation.

What is FINRA Rule 2210?

Governs communications with the public. Categories: Retail Communication, Correspondence, Institutional. Different content and approval standards for each.

What are the three categories of communications under FINRA Rule 2210?

Correspondence (to 25 or fewer retail investors within 30 days), retail communication (to more than 25 retail investors), and institutional communication (to institutional investors only).

Practise the full chapter

These are a sample. The full Seeks Business for the Broker-Dealer from Customers and Potential Customers chapter runs 18 items with per-chapter progress tracking, on the web and in the iOS app.

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