Series 7 - Equity & Debt Securities
Exam 2025 Questions and Answers
Why would a company buy back stock? - ANSWER✔✔-Increases E/S and use for
future acquisitions
What are debentures? - ANSWER✔✔-A debt instrument NOT secured by physical
assets or collateral, backed only by the creditworthiness of the issuer
What do shareholders get to vote on? - ANSWER✔✔-Issuance of new securities, stock
splits, and board members
Who issues ADRs? - ANSWER✔✔-Large commercial U.S. banks (foreign department
within the bank does the issuance)
Transfer agent vs. registrar - ANSWER✔✔-Transfer agent - distributes additional shares
in the event of forward stock splits or new certificates in reverse stock splits
Registrar - ensures corps. do not exceed their authorized shares
DERP
When is the ex-date? - ANSWER✔✔-Declaration, ex, recorded, payment
Ex-date (set by exchanges) is TWO days before record date (set by BOD)
Why is preferred stock similar to bonds? - ANSWER✔✔-Affected by IR
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,Decrease in IR means increase in value, and vice versa
The overnight repo interest rate is usually lower than bank rates and just below or
comparable to the:
A)
prime rate.
B)
T-bill rate.
C)
discount rate.
D)
Fed funds rate. - ANSWER✔✔-Fed funds rate
Which of the following statements are TRUE of Ginnie Maes?
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,I.They are quoted in 1/8ths.
II.They are quoted in 1/32nds.
III.They are traded with an accrued interest computed on an actual day basis.
IV.They are traded with an accrued interest computed on a 30/360 basis.
A)
II and III.
B)
I and III.
C)
I and IV.
D)
II and IV. - ANSWER✔✔-D) II and IV
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, A collateralized mortgage obligation (CMO) issued by a financial institution or a home
builder would be known as
A)
a targeted amortization (TAC) CMO
B)
an agency issued CMO
C)
a planned amortization (PAC) CMO
D)
a private label issued CMO - ANSWER✔✔-D) a private label issued CMO
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
Exam 2025 Questions and Answers
Why would a company buy back stock? - ANSWER✔✔-Increases E/S and use for
future acquisitions
What are debentures? - ANSWER✔✔-A debt instrument NOT secured by physical
assets or collateral, backed only by the creditworthiness of the issuer
What do shareholders get to vote on? - ANSWER✔✔-Issuance of new securities, stock
splits, and board members
Who issues ADRs? - ANSWER✔✔-Large commercial U.S. banks (foreign department
within the bank does the issuance)
Transfer agent vs. registrar - ANSWER✔✔-Transfer agent - distributes additional shares
in the event of forward stock splits or new certificates in reverse stock splits
Registrar - ensures corps. do not exceed their authorized shares
DERP
When is the ex-date? - ANSWER✔✔-Declaration, ex, recorded, payment
Ex-date (set by exchanges) is TWO days before record date (set by BOD)
Why is preferred stock similar to bonds? - ANSWER✔✔-Affected by IR
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,Decrease in IR means increase in value, and vice versa
The overnight repo interest rate is usually lower than bank rates and just below or
comparable to the:
A)
prime rate.
B)
T-bill rate.
C)
discount rate.
D)
Fed funds rate. - ANSWER✔✔-Fed funds rate
Which of the following statements are TRUE of Ginnie Maes?
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,I.They are quoted in 1/8ths.
II.They are quoted in 1/32nds.
III.They are traded with an accrued interest computed on an actual day basis.
IV.They are traded with an accrued interest computed on a 30/360 basis.
A)
II and III.
B)
I and III.
C)
I and IV.
D)
II and IV. - ANSWER✔✔-D) II and IV
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, A collateralized mortgage obligation (CMO) issued by a financial institution or a home
builder would be known as
A)
a targeted amortization (TAC) CMO
B)
an agency issued CMO
C)
a planned amortization (PAC) CMO
D)
a private label issued CMO - ANSWER✔✔-D) a private label issued CMO
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
