Series 7 - Mastery Exam
An investor is interested in a limited partnership and asks his registered representative to explain the
"crossover point" referred to in discussions about the tax consequences of the program. The best
definition would be
A)
the point at which the program begins to generate taxable income instead of losses, which generally
occurs quickly if not in the very first year.
B)
the point at which the program begins to generate losses instead of taxable income, which generally
occurs in later years.
C)
the point at which the program begins to generate losses instead of taxable income, which generally
does not occur until near the time the partnership is expected to be dissolved.
D)
the point at which the program begins to generate taxable income instead of losses, which generally
occurs in later years. - Answer-D - 100%
An investor sold short 1,000 shares of LUMN at 52 on January 10. If the investor covered the short
position at 43 on January 15 of the following year, which if the following statements is true?
,A)
Buying the same stock back within 30 days created a wash sale.
B)
The investor has a long-term capital gain of $9,000.
C)
Only $3,000 of the investor's loss is deductible against ordinary income.
D)
The investor has a short term capital gain. - Answer-B - 100%
The volatility market index (VIX) is best characterized as
A)
an index option traded on the NYSE.
B)
a measurement of the implied stability of options written on the S&P 500.
C)
a "fear" index, measuring the expectations of market volatility.
D)
a highly volatile index-tracking exchange-traded fund ETF. - Answer-C - 100%
An appeal of an adverse Code of Procedure decision may be made by either party within
A)
10 days of the decision date.
B)
30 days of the decision date.
C)
,45 days of the decision date.
D)
25 days of the decision date. - Answer-D - 100%
Among the items shown on a customer confirmation for a bond transaction is the amount of accrued
interest. The amount of accrued interest is
A)
subtracted on both the buyer's and the seller's confirmations.
B)
subtracted on the buyer's confirmation and added to the seller's confirmation.
C)
added on the buyer's confirmation and subtracted on the seller's confirmation.
D)
added on the buyer's confirmation and added on the seller's confirmation. - Answer-D - 100%
An agent has recommended investments in the XYZ fund family to his customers for 10 years. He is
referred by one of his customers to a prospect who has inherited $500,000 as beneficiary of a life
insurance policy. The prospect tells the agent she has never invested in the market before, is risk averse,
and wants safety of principal to be the first priority with liquidity second. The agent recommends the
following investments:
XYZ government bond fund, B shares $200,000
XYZ large-cap growth and Income B shares $150,000
XYZ liquid reserve money market $150,000
The recommendation is
A)
unsuitable because it does not address the customer's two primary objectives.
B)
, suitable because it addresses the customer's liquidity objective.
C)
suitable because it addresses the customer's safety objective.
D)
suitable because he recommended conservative investments. - Answer-A - 100%
A margin account has a market value of $24,000 and a debit balance of $20,000. The maintenance call
will be for
A)
$8,000.
B)
$6,000.
C)
$4,000.
D)
$2,000. - Answer-D - 100%
An investor holding shares of several funds from the CDS fund family has opted for a fixed dollar
withdrawal plan to supplement her income each month. With this type of withdrawal plan, the amount
received each month
A)
must be at least equal to the account earnings that period in order to be distributed.
B)
must be less than the account earnings that period in order to be distributed.
C)
will always be more than the account earnings that period.
D)
An investor is interested in a limited partnership and asks his registered representative to explain the
"crossover point" referred to in discussions about the tax consequences of the program. The best
definition would be
A)
the point at which the program begins to generate taxable income instead of losses, which generally
occurs quickly if not in the very first year.
B)
the point at which the program begins to generate losses instead of taxable income, which generally
occurs in later years.
C)
the point at which the program begins to generate losses instead of taxable income, which generally
does not occur until near the time the partnership is expected to be dissolved.
D)
the point at which the program begins to generate taxable income instead of losses, which generally
occurs in later years. - Answer-D - 100%
An investor sold short 1,000 shares of LUMN at 52 on January 10. If the investor covered the short
position at 43 on January 15 of the following year, which if the following statements is true?
,A)
Buying the same stock back within 30 days created a wash sale.
B)
The investor has a long-term capital gain of $9,000.
C)
Only $3,000 of the investor's loss is deductible against ordinary income.
D)
The investor has a short term capital gain. - Answer-B - 100%
The volatility market index (VIX) is best characterized as
A)
an index option traded on the NYSE.
B)
a measurement of the implied stability of options written on the S&P 500.
C)
a "fear" index, measuring the expectations of market volatility.
D)
a highly volatile index-tracking exchange-traded fund ETF. - Answer-C - 100%
An appeal of an adverse Code of Procedure decision may be made by either party within
A)
10 days of the decision date.
B)
30 days of the decision date.
C)
,45 days of the decision date.
D)
25 days of the decision date. - Answer-D - 100%
Among the items shown on a customer confirmation for a bond transaction is the amount of accrued
interest. The amount of accrued interest is
A)
subtracted on both the buyer's and the seller's confirmations.
B)
subtracted on the buyer's confirmation and added to the seller's confirmation.
C)
added on the buyer's confirmation and subtracted on the seller's confirmation.
D)
added on the buyer's confirmation and added on the seller's confirmation. - Answer-D - 100%
An agent has recommended investments in the XYZ fund family to his customers for 10 years. He is
referred by one of his customers to a prospect who has inherited $500,000 as beneficiary of a life
insurance policy. The prospect tells the agent she has never invested in the market before, is risk averse,
and wants safety of principal to be the first priority with liquidity second. The agent recommends the
following investments:
XYZ government bond fund, B shares $200,000
XYZ large-cap growth and Income B shares $150,000
XYZ liquid reserve money market $150,000
The recommendation is
A)
unsuitable because it does not address the customer's two primary objectives.
B)
, suitable because it addresses the customer's liquidity objective.
C)
suitable because it addresses the customer's safety objective.
D)
suitable because he recommended conservative investments. - Answer-A - 100%
A margin account has a market value of $24,000 and a debit balance of $20,000. The maintenance call
will be for
A)
$8,000.
B)
$6,000.
C)
$4,000.
D)
$2,000. - Answer-D - 100%
An investor holding shares of several funds from the CDS fund family has opted for a fixed dollar
withdrawal plan to supplement her income each month. With this type of withdrawal plan, the amount
received each month
A)
must be at least equal to the account earnings that period in order to be distributed.
B)
must be less than the account earnings that period in order to be distributed.
C)
will always be more than the account earnings that period.
D)
