Series 7 Exam Question 180: Answer and Explanation

Question: 180

An agent's recommendations to a customer

I. must be approved in advance by a manager

II. must be in line with the customer's risk tolerance and investment objectives

III. must be reviewed by a principal if they result in a trade

IV. must be in accordance with Federal Reserve Board rules

• A. I and IV
• B. II and III
• C. II, III, and IV
• D. I and II

Correct Answer: B

Explanation:

B. Recommendations made to a customer must fit that customer's objectives and risk tolerance. A review by a principal is necessary if the recommendations result in a trade. For the Series 7 exam purposes, individual recommendations are governed by FINRA, not the FRB (Federal Reserve Board).