FINRA Series 87 Practice Test & Mock Exam

Series 87 rewards candidates who can prepare and disseminate research under strict disclosure and conflict rules, choose the right approval path, and avoid publication or marketing mistakes. If you are searching for Series 87 sample questions, a practice test, mock exam, or simulator, this is the main Securities Prep page to start on web and continue on iOS or Android with the same account. This page includes 24 sample questions with detailed explanations so you can try the exam style before opening the full app question bank.

Interactive Practice Center

Start a practice session for Series 87 below, or open the full app in a new tab. For the best experience, open the full app in a new tab and navigate with swipes/gestures or the mouse wheel—just like on your phone or tablet.

▶ Click to Load Interactive App

Open Full App in a New Tab

A small set of questions is available for free preview. Subscribers can unlock full access by signing in with the same account they use on web and mobile.

Prefer to practice on your phone or tablet? Download the Securities Prep app:

Scan for iOS (United States)

Scan for Android (United States)

• iOS: United States · Canada
• Android: United States · Canada

If you already subscribed on web or mobile, sign in with the same account here to continue on desktop.

Free diagnostic: Try the 50-question Series 87 full-length practice exam before subscribing.

What this Series 87 practice page gives you

• a direct route into the Securities Prep simulator for Series 87
• targeted practice around research-report preparation, disclosures, conflicts, approvals, and dissemination workflow
• detailed explanations that show why the strongest research-compliance answer is the most defensible
• a clear free-preview path before you subscribe
• the same subscription across web and mobile

Series 87 exam snapshot

• Provider: FINRA
• Exam: Research Analyst Qualification Exam Part II
• Practice reference: 50 practice questions in 105 minutes
• Registration context: generally paired with the SIE and Series 86 for the full research-analyst path

Topic coverage for Series 87 practice

• Report production: drafting, approvals, and report-preparation workflow
• Disclosures and conflicts: disclosure rules, conflict controls, and marketing or dissemination restrictions
• Publication control: choosing the right approval and dissemination path under time pressure

How Series 87 differs from similar routes

How to use the Series 87 simulator efficiently

1. Start with disclosure and approval-process drills so the research-publication workflow becomes automatic.
2. Review every miss until you can explain which conflict, disclosure, or dissemination rule changed the answer.
3. Move into mixed sets once you can switch between report-prep and dissemination scenarios without hesitation.
4. Finish with timed runs so the 105-minute pace feels controlled.

Free preview vs premium

• Free preview: 24 public sample questions on this page plus the web app entry so you can validate the question style and explanation depth.
• Premium: the full Series 87 practice bank, focused drills, mixed sets, timed mock exams, detailed explanations, and progress tracking across web and mobile.

Free samples and full bank

• Live now: this exact practice route is available in Securities Prep on web, iOS, and Android.
• On-page sample set: this page includes 24 public sample questions from the current practice coverage.
• Full app: open the Securities Prep web app or mobile app for broader timed coverage.

Good next pages after Series 87

• Series 86 if you are completing the research-analyst technical half
• Series 161 and Series 162 if you are moving from analyst work into the supervisory-analyst route
• Series 16 Route Guide if you want the broader research-supervision sequence first
• FINRA if you want the wider research, specialist, and principal route map first

Free review resources

Use these free SecuritiesMastery.com resources for concept review, then return to this page when you are ready to practice in Securities Prep.

• Series 87 Cheat Sheet
• Series 87 Study Guide

Focused sample questions

Use these focused Series 87 sample-question pages when you want to isolate one official topic area before returning to the mixed simulator.

• Research Reports
• Research Dissemination
• Free Series 87 Full-Length Practice Exam

24 Series 87 sample questions with detailed explanations

These sample questions cover multiple blueprint areas for Series 87. Use them to check your readiness here, then move into the full Securities Prep question bank for broader timed coverage.

Question 1

Topic: Function 5 — Dissemination and Marketing of Information

Your firm is a co-manager for ABC Corp’s follow-on offering. A registration statement has been filed and a preliminary prospectus is available. Compliance reminds the desk that during an active registered offering, any written communication that could be viewed as an “offer” must be treated as an offering communication and, if used, must be accompanied or preceded by the preliminary prospectus (or otherwise handled as compliant offering material).

The research analyst wants to email clients a “flash note” stating: “Upgrade to Buy; the upcoming offering is an attractive entry point—consider participating.” Which approach best aligns with durable research standards and Section 5 prospectus concepts during the offering?

• A. Post the flash note to the analyst’s public social media to ensure equal access
• B. Send the flash note immediately, and deliver the preliminary prospectus only upon client request
• C. Coordinate with Legal/Compliance, remove offering solicitation language, and if distributed during the offering ensure prospectus-delivery requirements are met
• D. Send the flash note as written, but only to institutional accounts

Best answer: C

Explanation: During an active registered offering where the firm is participating, research communications can be viewed as written offers and must be controlled like offering communications. The best approach is to keep the communication fair and balanced (not promotional), coordinate with Legal/Compliance, and ensure any required prospectus-delivery or other offering-material handling is satisfied if it is distributed during the offering.

Question 2

Topic: Function 4 — Preparation of Research Reports

Which statement is most accurate regarding factual statements versus opinions in a research report?

• A. A 12-month price target is an opinion and should include its basis and key assumptions.
• B. Opinions may be stated without any supporting basis as long as they are labeled opinion.
• C. A 12-month price target is a factual statement and does not need qualifiers.
• D. Factual statements may be presented without identifying sources if they are widely known.

Best answer: A

Explanation: Forward-looking items such as ratings, forecasts, and price targets are opinions, not facts. They should be clearly framed with opinion language and supported by a reasonable basis (for example, key assumptions or analytical support) so readers understand what the view relies on.

Question 3

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst has received Reg AC certification for a new initiation report on ABC Co., but the report is still pending final supervisory approval. The analyst plans to email 25 institutional clients today using the firm’s email system and include (1) a PDF attachment of the report and (2) a hyperlink to the same PDF stored on a personal cloud drive “for easier access.” The firm’s policy requires that research communications (including any attachments and hyperlinked content) be supervised and retained in the firm’s records system.

What is the single best compliant action?

• A. Send now with the PDF attached; remove the personal cloud-drive link
• B. Send now as a “draft” and have Compliance archive the final version later
• C. Wait for approval and distribute only via firm-controlled, archived channels
• D. Send now with only the hyperlink to the personal cloud drive to avoid attachment retention issues

Best answer: C

Explanation: Because the report is pending final supervisory approval, it should not be disseminated yet. Once approved, distribution should occur only through firm-controlled channels that automatically capture and retain the email and the exact content provided (including attachments and any hyperlinked material). Using a personal cloud link defeats supervision and retention controls.

Question 4

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst is scheduled to publish a rating change on ABC Corp tomorrow at 7:00 a.m. ET after supervisory approval. A large institutional client emails: “Can you give me a quick heads-up on the rating and target tonight so I can position? Also, can you get me a private call with ABC’s CFO before your note goes out?”

Firm policy states: (1) research must be disseminated broadly and not selectively, and (2) any request for non-public information or preferential access must be escalated to Research Management/Compliance.

Which response best aligns with durable research dissemination standards?

• A. Decline to provide any advance rating/target, escalate the request, and offer to discuss only already-public views until broad dissemination occurs
• B. Provide a high-level “positive/negative” directional hint but avoid giving the target price
• C. Email the client the draft report marked “confidential” and remind them not to forward it
• D. Agree to arrange a one-on-one CFO call for that client and simply caution the issuer not to share material non-public information

Best answer: A

Explanation: The client is requesting preferential access and potentially non-public information (advance notice of a rating/price target and a private management call). The analyst should not selectively disclose research conclusions and should follow the firm’s required escalation path. The compliant approach is to escalate and restrict discussion to already-public information until the report is disseminated broadly.

Question 5

Topic: Function 4 — Preparation of Research Reports

At 2:00 p.m. Tuesday, an equity research analyst finalizes a decision to change ABC Corp from Hold to Buy and raise the price target. The report is scheduled for broad client dissemination at 8:30 a.m. Wednesday.

Firm policy states: (1) the analyst and household members may not trade ABC from the time the change is determined until two business days after dissemination, and (2) the firm may not initiate proprietary positions in ABC in anticipation of the report (but may continue bona fide market making/customer facilitation under supervision).

Which action is INCORRECT under the policy?

• A. Compliance adds ABC to a restricted list until two business days after dissemination
• B. The analyst buys ABC in a personal account at 3:00 p.m. Tuesday
• C. The trading desk continues supervised market making in ABC without building inventory based on the pending report
• D. The analyst submits any planned ABC trade for preclearance and waits until the blackout ends

Best answer: B

Explanation: Once the analyst has determined a change in rating/price target, firm policies commonly impose a blackout to prevent trading ahead of publication. That restriction applies even if the analyst already owns the security and believes the report is based on public information. Therefore, purchasing ABC before the report is disseminated is prohibited.

Question 6

Topic: Function 4 — Preparation of Research Reports

A broker-dealer decides to terminate research coverage of Issuer XYZ after the lead analyst leaves the firm. The firm plans to send a “termination of coverage” notice.

Which statement best matches the primary purpose of this notice and how it should be communicated at a high level?

• A. Replace the research report’s analyst certification requirement for the prior reports
• B. Reaffirm the last rating and price target to prevent client confusion
• C. Limit distribution to clients who specifically request the notice
• D. Notify recipients of prior research that coverage has ended and prior views are no longer current

Best answer: D

Explanation: A termination of coverage notice is a lifecycle communication used to inform research consumers that the firm has stopped covering an issuer. It is intended to prevent reliance on stale research views (such as ratings or price targets) by clearly indicating that updates will no longer be provided and communicating that fact to the appropriate audience.

Question 7

Topic: Function 4 — Preparation of Research Reports

Which statement is most accurate regarding supervisory red flags that research content may be biased by conflicts of interest?

• A. A favorable rating change shortly before an investment banking engagement is not a red flag if the analyst can verbally explain the change to sales personnel.
• B. A report with a neutral rating but highly promotional tone and little or no discussion of material risks is a red flag that warrants heightened supervisory review for potential bias.
• C. If required conflict disclosures are included, supervisors generally do not need to evaluate whether the report’s tone and risk discussion appear balanced.
• D. Using company-provided marketing language is not a red flag as long as the report includes a price target and rating definition.

Best answer: B

Explanation: Supervisors should look for indicators that the substance of a report is not balanced and may be influenced by conflicts. A key red flag is inconsistency between the stated rating and the overall narrative, especially when negative factors and material risks are omitted or downplayed. This mismatch can suggest the research is being “sold” rather than analyzed.

Question 8

Topic: Function 5 — Dissemination and Marketing of Information

Which statement is most accurate regarding capturing and retaining IM and text messages used to disseminate a research report or a research update?

• A. Retention is only required when the message contains a rating or price target change.
• B. They must be sent through firm-approved systems that capture and archive them for required retention and supervision.
• C. Analysts may use personal texting apps as long as they later forward screenshots to Compliance.
• D. They do not need to be retained if the full research report is also emailed to clients.

Best answer: B

Explanation: IM and text messages used to distribute research are firm business records and must be captured in a way that permits retention and supervisory review. The practical control is to require research dissemination only through approved communication channels that are automatically archived according to the firm’s recordkeeping program.

Question 9

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst’s initiation report on ABC Corp has been approved by the research principal and the analyst has completed the firm’s required certification for the report. The analyst drafts a “quick take” email that includes the rating and price target and plans to send it to the firm’s “All Clients—Equity Research” distribution list, with a note that the full report is available on the firm’s research portal.

Firm policy requires that research blasts be sent only through the firm’s approved blast tool, which (1) suppresses accounts flagged “no research” and other ineligible recipients, and (2) automatically appends the firm’s standard research disclosures (or a direct link to the disclosures in the full report).

What is the best next step before the email is sent?

• A. Send the quick take to top institutional accounts first, then blast broadly
• B. Email the quick take to the sales force first to coordinate client calls
• C. Submit the email and report to Research Ops to send via the approved blast tool
• D. Post the rating and price target excerpt on the analyst’s social media, then email clients

Best answer: C

Explanation: Before a research blast is disseminated, the firm must control who receives it and ensure required disclosures are delivered with it (or via a direct link to the disclosures in the full report). Here, firm policy specifies an approved blast tool that both suppresses ineligible recipients and appends/link-displays disclosures. Routing the communication through that tool is the correct next step.

Question 10

Topic: Function 4 — Preparation of Research Reports

An analyst is finalizing a published equity research update that will be posted to the firm’s public website and emailed to the sales force before the market opens tomorrow. The analyst has signed the required research certification, and the standard conflict disclosures (including the firm’s market making status) will appear at the end of the report. During supervisory review, Compliance flags the draft statement, “Revenues will increase even if pricing weakens, and costs should remain stable,” as not sufficiently evidence-based.

Which revision is the single best way to address the comment while keeping the report compliant and useful to investors?

• A. Keep the statement but add “results may differ” at the end
• B. Remove the statement entirely to avoid making any forward-looking comment
• C. Add a brief sensitivity discussion showing how volume, price, and key input costs affect revenue and margins
• D. Discuss only price sensitivity and omit input-cost effects to simplify the report

Best answer: C

Explanation: Research reports should present forecasts and conclusions in an evidence-based way that ties results to the key drivers in the analyst’s model. A sensitivity discussion that explains how changes in volume, price, and input costs flow through to revenue and margins addresses the “stable regardless” concern and helps investors understand what matters most. Boilerplate cautionary language alone does not cure an unsupported claim.

Question 11

Topic: Function 4 — Preparation of Research Reports

A research analyst is scheduled to publish a “Buy” initiation on QRS Corp. at 9:00 a.m. ET to all clients and the firm’s research portal. At 7:30 a.m., an investment banker emails the analyst: “We signed the engagement letter last night to act as joint bookrunner on QRS’s follow-on offering. Please keep this confidential until the company’s press release tomorrow.”

The draft report’s disclosures are standard and do not mention any current or pending investment banking relationship with QRS.

Which is the primary compliance red flag indicating heightened supervisory review is warranted before approving the report for dissemination?

• A. The report would be issued while the firm has a confidential, newly signed investment banking engagement with the subject company that is not disclosed
• B. The analyst is circulating unverified market rumors about QRS in the report narrative
• C. The report will be disseminated to institutional clients before being posted on the firm’s portal
• D. The analyst is trading QRS shares in a personal account ahead of publication

Best answer: A

Explanation: A newly signed underwriting engagement is a material conflict of interest and a sensitive event, especially when it is confidential and not reflected in the report’s disclosures. That combination is a classic “unusual timing” red flag that should trigger heightened supervisory review and appropriate controls before research is approved and disseminated.

Question 12

Topic: Function 4 — Preparation of Research Reports

A broker-dealer’s research publishing system shows the following entry for a report that is scheduled to be released to clients.

Exhibit: Approval log (excerpt)

Doc ID: QRS-11844
Product: Equity research report (rating change)
Analyst: J. Chen
Supervisory review: R. Diaz (Research Supervisor) — APPROVED 9:42 a.m.
Dissemination queue: 10:15 a.m. (client portal + email)
Notes: “Routine report — compliance pre-review not required under policy.”

Which interpretation is supported by the exhibit and baseline supervision requirements for research?

• A. Supervisory review may occur after dissemination as long as it is later documented.
• B. Investment banking approval is required before a rating change is published.
• C. Compliance must pre-review all research before any dissemination.
• D. The firm has documented supervisory approval before client dissemination.

Best answer: D

Explanation: Research reports are subject to a firm’s supervisory system, including documented review by an appropriate supervisor before dissemination. The exhibit shows the report was approved by a research supervisor prior to the scheduled release time, creating an audit trail of supervision even if compliance pre-review is not required for this routine report under firm policy.

Question 13

Topic: Function 5 — Dissemination and Marketing of Information

Your firm is a syndicate member in XYZ’s IPO. During the offering period, a research analyst drafts a 2-page “IPO Highlights” note that includes a bullish recommendation, a valuation summary, and a statement that the firm “expects strong aftermarket performance.” Sales asks to email the note to retail clients who have expressed interest in the IPO.

Which approach best aligns with durable research distribution standards, including when dealer prospectus-delivery concepts may matter for new issues?

• A. Post the note on the firm’s public social media to ensure equal access
• B. Email the note broadly because it is “research,” not offering material
• C. Distribute only with (or after) the IPO prospectus, with balanced language and full disclosures
• D. Send the note now and plan to deliver the prospectus only at trade settlement

Best answer: C

Explanation: Because the firm is participating in an IPO, distributing a bullish “IPO Highlights” note can function like selling material and raise prospectus-delivery expectations. The best practice is to ensure the prospectus is delivered with or before the material and to keep the communication fair and balanced with a clear basis for views and prominent conflict disclosures. This reduces misleading promotion risk and supports appropriate offering-period controls.

Question 14

Topic: Function 5 — Dissemination and Marketing of Information

Which statement is most accurate regarding managing material nonpublic information (MNPI) risk when a research analyst speaks with an issuer’s management team?

• A. If the analyst signs a confidentiality agreement, the analyst may incorporate MNPI into the next research report as long as it is attributed to management.
• B. An analyst may receive MNPI from management as long as the analyst does not trade the issuer’s securities personally.
• C. If the conversation is recorded by the broker-dealer, any information shared is considered public rather than nonpublic.
• D. If management starts to share MNPI, the analyst should stop the discussion and promptly notify Compliance before publishing research or trading.

Best answer: D

Explanation: Issuer-management discussions create heightened MNPI risk because management may inadvertently disclose information not yet public. A key control is to prevent receipt or continued possession by halting the conversation when MNPI appears likely and escalating to Compliance for guidance. This helps avoid improper publication or trading while MNPI may be in hand.

Question 15

Topic: Function 4 — Preparation of Research Reports

An equity research analyst drafts a one-page “flash note” to email to the firm’s sales force and institutional clients. The note includes a rating of Outperform and a new 12-month price target of $52. The stock is currently trading at $40.

Firm policy states: Written research-related communications that include a price target with implied upside or downside of 20% or more from the current price must receive pre-dissemination approval by a Research Supervisory Analyst (research principal).

Based on the policy, which approval is required before the analyst disseminates the flash note?

• A. Pre-dissemination approval by a Research Supervisory Analyst (research principal)
• B. No pre-approval is required as long as the note is retained
• C. Pre-dissemination approval by the issuer’s investor relations department
• D. Pre-dissemination approval by the investment banking department

Best answer: A

Explanation: The flash note contains a price target, so the firm’s threshold test applies. The implied upside from $40 to $52 is 30%, which is at least 20%. Therefore, the communication must be approved by a Research Supervisory Analyst (research principal) before it is disseminated.

Question 16

Topic: Function 4 — Preparation of Research Reports

You are drafting an earnings preview note for ABC Corp. Firm policy requires that any implied upside/downside be calculated as \((\text{price target} - \text{current price}) / \text{current price}\) and rounded to the nearest whole percent. The note must also describe expectations and key watch items without implying certainty.

Exhibit (inputs): Current price: $48; Price target: $54; Street consensus EPS: $1.18; Your estimate EPS: $1.20.

Which draft sentence is most appropriate to include in the preview note?

• A. At $48, our $54 target implies ~13% downside; we expect a modest beat and will watch margins.
• B. At $48, our $54 target implies ~13% upside; shares will rise after earnings, so buy now.
• C. At $48, our $54 target implies ~11% upside; we expect a modest beat and will watch margins.
• D. At $48, our $54 target implies ~13% upside; we expect a modest beat and will watch margins.

Best answer: D

Explanation: The implied price move should be computed from the current price: \((54-48)/48\approx 12.5\%\), rounded to about 13%. An earnings preview should communicate expectations and key watch items using appropriately qualified language, avoiding guarantees about price reaction or outcomes.

Question 17

Topic: Function 4 — Preparation of Research Reports

A research analyst is finalizing an initiation-of-coverage research report on DeltaBio that is scheduled to be posted to the firm’s public website tomorrow morning. Earlier today, the analyst accepted two issuer-paid suite tickets to a DeltaBio sporting event from the company’s investor relations officer, and the analyst also disclosed to the editor that the IR officer is the analyst’s long-term romantic partner. The report has not yet been approved by research supervision/compliance and the analyst has not signed the analyst certification. What is the single BEST compliant action to take before the report is disseminated?

• A. Return the tickets, document the return, and publish as scheduled
• B. Escalate immediately to research supervision/compliance and step off coverage pending their direction
• C. Add a disclosure about the relationship and publish as scheduled
• D. Publish on schedule but restrict distribution to institutional clients only

Best answer: B

Explanation: A romantic relationship with a subject company’s IR officer is a significant conflict that threatens research independence, and issuer-paid entertainment adds another conflict fact pattern. The appropriate response is to promptly escalate to research supervision/compliance and refrain from publishing until controls are applied, which commonly includes removing the analyst from coverage and documenting the resolution.

Question 18

Topic: Function 4 — Preparation of Research Reports

Which statement is most accurate about how a research report should communicate key risks to an investment thesis?

• A. To avoid confusing readers, a report should state the thesis with high conviction and limit risk discussion to rare, low-probability events.
• B. Key risks should be specific and material to the thesis, and each risk should explain the mechanism by which it could change the investment view (for example, affect earnings drivers, valuation assumptions, or the price target).
• C. A standardized list of common industry risks is sufficient as long as it is included in every report.
• D. It is acceptable to list key risks without describing how they could affect the investment thesis, as long as the thesis section is detailed.

Best answer: B

Explanation: A well-written risk section is not boilerplate; it highlights the risks most relevant to the report’s specific thesis. Each risk should be tied to the core drivers and assumptions supporting the recommendation, explaining how the risk could weaken or invalidate the thesis and what that would likely mean for the conclusion (including the price target or rating).

Question 19

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst at a broker-dealer sees a burst of social media posts claiming that Issuer Q will be acquired “this week at a large premium.” The stock price and volume spike, but the analyst cannot verify the claim with public sources or the company. Sales asks the analyst to “send something out” to clients as market color.

Which action is NOT appropriate in this situation?

• A. Send clients a brief blast repeating the acquisition rumor as “likely,” since it is widely circulating
• B. Preserve and document the analyst’s observations and related messages for the firm’s records
• C. Tell Sales to avoid discussing the rumor as fact and to use only verified, public information
• D. Escalate the rumor to Compliance/Supervision and follow firm procedures before any external communication

Best answer: A

Explanation: A key red flag is a sudden price/volume move driven by unverified “deal” chatter. Research personnel should not amplify or lend credibility to such rumors through client communications. The appropriate response is to escalate, control communications, and maintain records while verification is pursued through permitted channels.

Question 20

Topic: Function 4 — Preparation of Research Reports

A research analyst is preparing an initiation research report on Apex Biotech (APEX) with a new rating and price target. The report is scheduled to be posted to the firm’s client research portal and emailed to institutional clients at 4:00 p.m. today after supervisory sign-off and the analyst’s certification are completed.

At 1:00 p.m., the analyst learns the analyst’s spouse (same household) purchased APEX shares last week and still holds the position. The draft report’s disclosure section does not mention any analyst or household member holdings.

What is the single best compliant action before disseminating the report?

• A. Send the report only to internal sales, not to clients
• B. Delay dissemination until the spouse sells the APEX shares
• C. Disseminate as scheduled and notify Compliance after posting
• D. Add a household member holdings disclosure and resubmit for approval

Best answer: D

Explanation: A household member’s ownership of the subject company’s securities is a research conflict that must be disclosed to report recipients. Because the analyst learned of the holding before publication, the report should be updated to include the required disclosure and then go back through the firm’s review/approval process prior to dissemination.

Question 21

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst drafts a two-page “flash note” that changes ABC Corp. from Hold to Buy and raises the 12-month price target. The firm is currently a co-manager on ABC’s marketed follow-on offering that is expected to price later this week, and sales asks the analyst to email the note to the sales force and a short list of top clients within the hour. The analyst also sees an unverified market rumor on social media about ABC being in acquisition talks and wants to address it in the note. The note has not yet received supervisory approval and the analyst has not yet completed the firm’s required research certification in the publishing system.

What is the single best compliant action?

• A. Email the flash note only to institutional clients with an investment banking conflict disclosure; obtain approval and certification afterward
• B. Stop dissemination and escalate to Compliance/Research Management; do not address the rumor, and distribute only after required approval/certification with full record retention
• C. Call the sales force with the rating change (no written note) to avoid creating a record until the offering prices
• D. Post the flash note to the firm’s public website to ensure broad dissemination, and separately remind sales not to repeat the rumor

Best answer: B

Explanation: Because the firm is participating in an imminent offering, dissemination must follow heightened controls and the firm’s required research approval and analyst certification workflow. Addressing an unverified acquisition rumor risks circulating misinformation and potential manipulation concerns. The compliant approach is to pause distribution, escalate, and ensure any eventual release is properly approved, certified, and fully recorded.

Question 22

Topic: Function 4 — Preparation of Research Reports

A broker-dealer’s equity research report includes the disclosure: “The firm makes a market in the subject company’s common stock.” The analyst has no personal or household holdings, and there is no current investment banking engagement.

Which option best matches the primary purpose of including this disclosure?

• A. Describe the firm’s rating definitions and rating distribution
• B. Provide the analyst’s required independence certification
• C. Show the report was disseminated broadly and simultaneously
• D. Address a perceived conflict from firm market making activity

Best answer: D

Explanation: Series 87 research conflict management covers both actual conflicts and perceived conflicts. A firm’s market making activity may create the appearance that research could be influenced by the firm’s trading interests, so disclosure is used to inform readers and mitigate that perception. This is required even when the analyst is personally independent under the facts.

Question 23

Topic: Function 5 — Dissemination and Marketing of Information

A research analyst is ready to publish a new initiating-coverage report with a rating and price target on an issuer. Firm policy requires (1) research be disseminated in an evenhanded way to clients, (2) issuer management not receive the report or its conclusions before clients, and (3) any distribution include the standard conflict/disclosure page.

Which dissemination approach best aligns with fair and balanced research standards and appropriate stakeholder handling?

• A. Post publicly, then share the same link with media
• B. Provide conclusions to trading before clients to prepare markets
• C. Release to clients and internal sales at the same time
• D. Send to issuer management for fact-checking before release

Best answer: A

Explanation: The best practice is broad, evenhanded dissemination that preserves research independence and avoids selective or advance distribution to any outside party. Posting the report through an approved public/client channel with required disclosures, and then providing the same access to other stakeholders (like media), aligns with fair and balanced communication standards.

Question 24

Topic: Function 4 — Preparation of Research Reports

A research analyst is finalizing the price chart section of a draft equity research report.

Exhibit: Price chart caption (draft)

Price chart shows daily closing prices for the last 12 months.
Markers on the chart indicate dates of rating changes.
Current rating: Outperform (as of Jan 12, 2026).
Current price target: $48 (as of Jan 12, 2026).

Based on the exhibit, which additional chart element is commonly required for a compliant research report price chart?

• A. Extend the price history to five years
• B. Use intraday high-low prices instead of closing prices
• C. Mark dates of price target changes with price on date
• D. Add trading volume bars for the entire period shown

Best answer: C

Explanation: The exhibit shows a 12-month daily closing price history and marks rating changes, but it does not indicate any markers for price target changes. Common research-report price chart conventions require that relevant rating/price target actions during the period be clearly identified on the chart, typically with the date and the price at that time.

Series 87 research rules map

Use this map after the sample questions to connect individual items to research conduct rules, analyst conflicts, disclosures, public appearances, supervision, and information barriers these Securities Prep samples test.

    flowchart LR
	  S1["Research rule or communication issue"] --> S2
	  S2["Identify conflict disclosure and participant roles"] --> S3
	  S3["Apply analyst independence controls"] --> S4
	  S4["Review report public appearance or rating action"] --> S5
	  S5["Escalate prohibited pressure or missing disclosure"] --> S6
	  S6["Retain records and supervise follow-up"]

Quick Cheat Sheet

Mini Glossary

• Research report: Written analysis with investment views, disclosures, conflicts, and supervisory requirements.
• Communications: Retail and institutional content subject to approval, recordkeeping, and fair-balanced standards.
• Supervision: Firm process for review, approval, escalation, and evidence of compliance.
• Underwriting: Investment banking process for structuring, pricing, distributing, and settling offerings.
• Order handling: Process for receiving, routing, executing, modifying, and documenting orders.

In this section

• Series 87: Research Reports
  Try 10 focused Series 87 questions on Research Reports, with explanations, then continue with the full Securities Prep practice test.
• Series 87: Research Dissemination
  Try 10 focused Series 87 questions on Research Dissemination, with explanations, then continue with the full Securities Prep practice test.
• Free Series 87 Full-Length Practice Exam: 50 Questions
  Try 50 free Series 87 practice questions across the official topic areas, with answers and explanations, then continue with the full Securities Prep question bank.