Series 7 Practice UPDATED Exam Questions
and CORRECT Answers
Which of the following statements regarding the privacy notice of a broker-dealer is NOT
TRUE?
a. customers must receive an updates privacy notice annually
b. a privacy notice does not need to be sent to a customer
c. a privacy notice must be provided to all customers at the time a relationship is established with
the firm
d. clients may opt out from having their information shared with third parties - CORRECT
ANSWER -b
customers must receive a privacy notice
a consumer must be provided with on prior to disclosing any info to a nonaffiliated 3rd party
Which of the following documents is NOT needed to open a corporate margin account?
a. a corporate charter and resolution
b. a new account form
c. an hypothecation agreement
d. a trust agreement - CORRECT ANSWER -d
a trust agreement is needed when opening an account for a retirement plan or trust account
Exclusion from the definition of an investment adviser are given to all of the following groups
except
,a. accountants and lawyers who provide advice in a manner incidental to their profession
b. publishers
c. broker-dealer and their representatives
d. advisers who limit advice to corporate debt only - CORRECT ANSWER -d
The Investment Advisers Act of 1940 excludes a, b, and c
A registered representative should update a customer's account records for a change in
I. address
II. net worth
III. employer
IV. investment objectives - CORRECT ANSWER - d. I, II, III, and IV
customer account records should be updated whenever there is a change to the original
information given
A RR would NOT need to notify his employer to open an account at another member firm if he
effects transactions in which of the following securities?
a. investment-grade, nonconvertible bonds
b. an actively managed emerging markets mutual fund
c. an exchange-traded funds (ETF) that is indexed to the S&P 500
d. a real estate investment trust listed on the NYSE - CORRECT ANSWER -b
an exception is made if the employee effects transactions only in mutual funds, unit investment
trusts, and variable annuities
under industry rules, the final approval to open a new account is given by a(n):
,a. RR
b. operations manager
c. partner or principal
d. supervisor - CORRECT ANSWER -c
not every supervisor is a principal and only a principal can approve a customer account
According to AML procedures which two of the following items is a member firm required to
obtain when opening a new account for a non-U.S. citizen?
I. Name of current employer
II. passport number & country of issuance
III. current address
IV. telephone number - CORRECT ANSWER - II and III
must obtain name, address, date of birth, one of the following: taxpayer ID #, passport & country
of issuance, or any other government-issued document w/ a photograph
If a broker-dealer will be holding a customer's mail, all of the following is required, EXCEPT:
a. The customer must provide written instructions that included the time-period during which the
mail will be held
b. the firm must provide written disclosures to the customer regarding alternative methods
through which the account may be monitored
c. the firm is required at reasonable intervals to verify the customer's instructions still apply
d. the customer's instructions must included a 3rd party who will be receiving his mail that
includes payments to the customer - CORRECT ANSWER -d
, if the period exceeds 3 consecutive months the customer's instructions must include a valid
reason
Relative to a custodian account, which TWO of the following statements are TRUE?
I. the minor is responsible for tax consequences
II. the custodian is responsible for tax consequences
III. income generated in the account is taxed as its received
IV. income generated in the account is taxed when the minor becomes an adult - CORRECT
ANSWER - I and III
Which of the following statements is NOT TRUE regarding the Uniform Gifts to Minors Act?
a. only one custodian is allowed for each account
b. the minor is responsible for all taxes due on dividends and interest received from securities
held in the account
c. only an adult may be a custodian
d. securities must be held in the name of the brokerage firm - CORRECT ANSWER -d
all securities are registered in the name of the custodian for the minor
A customer wants to open a cash account. What information is NOT required on the new account
form
a. the name of the RR responsible for the account
b. whether the customer is of legal age
c. the customer's signature
d. the branch manager's approval - CORRECT ANSWER -c
and CORRECT Answers
Which of the following statements regarding the privacy notice of a broker-dealer is NOT
TRUE?
a. customers must receive an updates privacy notice annually
b. a privacy notice does not need to be sent to a customer
c. a privacy notice must be provided to all customers at the time a relationship is established with
the firm
d. clients may opt out from having their information shared with third parties - CORRECT
ANSWER -b
customers must receive a privacy notice
a consumer must be provided with on prior to disclosing any info to a nonaffiliated 3rd party
Which of the following documents is NOT needed to open a corporate margin account?
a. a corporate charter and resolution
b. a new account form
c. an hypothecation agreement
d. a trust agreement - CORRECT ANSWER -d
a trust agreement is needed when opening an account for a retirement plan or trust account
Exclusion from the definition of an investment adviser are given to all of the following groups
except
,a. accountants and lawyers who provide advice in a manner incidental to their profession
b. publishers
c. broker-dealer and their representatives
d. advisers who limit advice to corporate debt only - CORRECT ANSWER -d
The Investment Advisers Act of 1940 excludes a, b, and c
A registered representative should update a customer's account records for a change in
I. address
II. net worth
III. employer
IV. investment objectives - CORRECT ANSWER - d. I, II, III, and IV
customer account records should be updated whenever there is a change to the original
information given
A RR would NOT need to notify his employer to open an account at another member firm if he
effects transactions in which of the following securities?
a. investment-grade, nonconvertible bonds
b. an actively managed emerging markets mutual fund
c. an exchange-traded funds (ETF) that is indexed to the S&P 500
d. a real estate investment trust listed on the NYSE - CORRECT ANSWER -b
an exception is made if the employee effects transactions only in mutual funds, unit investment
trusts, and variable annuities
under industry rules, the final approval to open a new account is given by a(n):
,a. RR
b. operations manager
c. partner or principal
d. supervisor - CORRECT ANSWER -c
not every supervisor is a principal and only a principal can approve a customer account
According to AML procedures which two of the following items is a member firm required to
obtain when opening a new account for a non-U.S. citizen?
I. Name of current employer
II. passport number & country of issuance
III. current address
IV. telephone number - CORRECT ANSWER - II and III
must obtain name, address, date of birth, one of the following: taxpayer ID #, passport & country
of issuance, or any other government-issued document w/ a photograph
If a broker-dealer will be holding a customer's mail, all of the following is required, EXCEPT:
a. The customer must provide written instructions that included the time-period during which the
mail will be held
b. the firm must provide written disclosures to the customer regarding alternative methods
through which the account may be monitored
c. the firm is required at reasonable intervals to verify the customer's instructions still apply
d. the customer's instructions must included a 3rd party who will be receiving his mail that
includes payments to the customer - CORRECT ANSWER -d
, if the period exceeds 3 consecutive months the customer's instructions must include a valid
reason
Relative to a custodian account, which TWO of the following statements are TRUE?
I. the minor is responsible for tax consequences
II. the custodian is responsible for tax consequences
III. income generated in the account is taxed as its received
IV. income generated in the account is taxed when the minor becomes an adult - CORRECT
ANSWER - I and III
Which of the following statements is NOT TRUE regarding the Uniform Gifts to Minors Act?
a. only one custodian is allowed for each account
b. the minor is responsible for all taxes due on dividends and interest received from securities
held in the account
c. only an adult may be a custodian
d. securities must be held in the name of the brokerage firm - CORRECT ANSWER -d
all securities are registered in the name of the custodian for the minor
A customer wants to open a cash account. What information is NOT required on the new account
form
a. the name of the RR responsible for the account
b. whether the customer is of legal age
c. the customer's signature
d. the branch manager's approval - CORRECT ANSWER -c
