Series 7 Final Exam 1 ACTUAL Exam
Questions and CORRECT Answers
Under MSRB rules, all of the following records must be kept for specified time periods
EXCEPT: - CORRECT ANSWER - Official Statements
A password protected website maintained by a member firm is considered to be: - CORRECT
ANSWER - Sales literature
All of the following statements are true regarding the Official Statement EXCEPT that the
Official Statement is: - CORRECT ANSWER - required to be prepared by issuers by
Municipal Securities Rulemaking Boards for all new issue municipal bonds
If an unsolicited facsimile is sent to a potential client, all of the following information must be
included EXCEPT the:
A. identity of sender
B. time, place and address from which sent
C. date and number of sheets
D. phone number from which sent - CORRECT ANSWER - C. date and number of sheets
which of the following usually acts as the stabilizing market maker - CORRECT
ANSWER - B. Managing underwriter
Under Regulation D, issuers must provide which of the following to investors to obtain a private
placement exemption? - CORRECT ANSWER - Copy of Offering Circular or Private
Memorandum
The interest income earned on which of the following municipal bonds would be included in the
alternative minimum tax computation? - CORRECT ANSWER - Industrial Revenue Bond
, The nominal interest rate on TIPS approximates the: - CORRECT ANSWER - real interest
rate
A security which gives the holder an undivided interest in a pool of mortgages is known as a(n): -
CORRECT ANSWER - pass through certificate
A corporate bond which obligates the issuer to pay interest ONLY if the company meets a
specified earnings test is a(n): - CORRECT ANSWER - income bond
Common shares of which of the following issuers are likely to have a Beta coefficient much
lower than +1 ? - CORRECT ANSWER - Public Utility
Which of the following is a lagging indicator? - CORRECT ANSWER - Reported
corporate profits - bc they show activity for the prior quarter
Highest interest rate is - CORRECT ANSWER - Prime rate
What is not suitable investments for an IRA account? - CORRECT ANSWER - Municipal
bonds
The overall economic performance of developing countries is expected to outpace that of the US
over the coming years. A customer that wishes to profit from this should receive which
recommendation and accompanying risk disclosures? - CORRECT ANSWER - The
customer should recommend an emerging markets fund, as long as the customer is willing to
assume political risk and exchange rate risk
All of the following income received by a corporate investor is partially excluded from income
tax EXCEPT: - CORRECT ANSWER - Convertible bond interest received - may exclude
50%
Which of the following is reported on Form 1099-DIV? - CORRECT ANSWER - Cash
dividends
Questions and CORRECT Answers
Under MSRB rules, all of the following records must be kept for specified time periods
EXCEPT: - CORRECT ANSWER - Official Statements
A password protected website maintained by a member firm is considered to be: - CORRECT
ANSWER - Sales literature
All of the following statements are true regarding the Official Statement EXCEPT that the
Official Statement is: - CORRECT ANSWER - required to be prepared by issuers by
Municipal Securities Rulemaking Boards for all new issue municipal bonds
If an unsolicited facsimile is sent to a potential client, all of the following information must be
included EXCEPT the:
A. identity of sender
B. time, place and address from which sent
C. date and number of sheets
D. phone number from which sent - CORRECT ANSWER - C. date and number of sheets
which of the following usually acts as the stabilizing market maker - CORRECT
ANSWER - B. Managing underwriter
Under Regulation D, issuers must provide which of the following to investors to obtain a private
placement exemption? - CORRECT ANSWER - Copy of Offering Circular or Private
Memorandum
The interest income earned on which of the following municipal bonds would be included in the
alternative minimum tax computation? - CORRECT ANSWER - Industrial Revenue Bond
, The nominal interest rate on TIPS approximates the: - CORRECT ANSWER - real interest
rate
A security which gives the holder an undivided interest in a pool of mortgages is known as a(n): -
CORRECT ANSWER - pass through certificate
A corporate bond which obligates the issuer to pay interest ONLY if the company meets a
specified earnings test is a(n): - CORRECT ANSWER - income bond
Common shares of which of the following issuers are likely to have a Beta coefficient much
lower than +1 ? - CORRECT ANSWER - Public Utility
Which of the following is a lagging indicator? - CORRECT ANSWER - Reported
corporate profits - bc they show activity for the prior quarter
Highest interest rate is - CORRECT ANSWER - Prime rate
What is not suitable investments for an IRA account? - CORRECT ANSWER - Municipal
bonds
The overall economic performance of developing countries is expected to outpace that of the US
over the coming years. A customer that wishes to profit from this should receive which
recommendation and accompanying risk disclosures? - CORRECT ANSWER - The
customer should recommend an emerging markets fund, as long as the customer is willing to
assume political risk and exchange rate risk
All of the following income received by a corporate investor is partially excluded from income
tax EXCEPT: - CORRECT ANSWER - Convertible bond interest received - may exclude
50%
Which of the following is reported on Form 1099-DIV? - CORRECT ANSWER - Cash
dividends
