STC Series 7 Exam 2025 With 100%
Correct Answers
A registered representative invites 20 retail clients to a seminar and allows each client to bring
one guest. The sale script that is used for the presentation is considered - CORRECT
ANSWER✔✔Retail communication
A registered representative will be soliciting customers to purchase low-priced equity securities.
A special disclosure document must be provided to customers if the securities are quoted on: -
CORRECT ANSWER✔✔The OTC Pink Marketplace
which of the following retirement plans need not set standards for vesting, eligibility and
funding? - CORRECT ANSWER✔✔deferred compensation plan
when analyzing the benefits of non-qualified deferred compensation plan, an individual would
consider that the plan would have all of the following characteristics Except - CORRECT
ANSWER✔✔the accumulated funds can be used as collateral when purchasing a new home
which of the following securities assist in the financing of import and export operations? -
CORRECT ANSWER✔✔Bankers' acceptances (BAs)
The factors that help determine a clients risk tolerance include:
I. Income
II. Age
III. Personality
IV. Net worth - CORRECT ANSWER✔✔all of the following help determine clients risk tolerance
,which of the following communications is NOT required to be filed with FINRA? - CORRECT
ANSWER✔✔communication sent only to clients that are registered investment advisers
which of the following persons is typically compensated by receiving a fee thats based on a
percentage of the assets under management? - CORRECT ANSWER✔✔an investment adviser
which of the following statements is true regarding numbered accounts? - CORRECT
ANSWER✔✔any type of account may be identified by a number, provided the customer's name
is on file
The sponsor of the Fenderbender Funds would like to publish some advertisements in several
personal finance magazines describing the past performance of the Fenderbender Balanced
Fund. In which of the following can the fund's performance be included?
I. A tombstone ad
II. An omitting prospectus ad
III. Generic advertising
IV. Supplementary sales literature - CORRECT ANSWER✔✔II. an omitting prospectus ad
IV. supplementary sales literature
A client is notified by his broker-dealer that certain trades may be executed by an Electronic
Communication Network (ECN). Which TWO of the following choices are risks of using this type
of system?
I. Trades are not subject to SRO regulations
II. There may be a limited ability to execute transactions
III. Higher commissions are possible
,IV. The system may only accept certain types of orders - CORRECT ANSWER✔✔II. There may be
a limited ability to execute transactions
IV. The system may only accept certain types of orders
whats the tax treatment of dividends if a corporation invests in the preferred or common shares
of another corporation? - CORRECT ANSWER✔✔65% of the dividends are excluded if ownership
exceeds 20%
Before being sent to customers, FINRA rules require approval by a principal of all of the
following EXCEPT: - CORRECT ANSWER✔✔a prospectus for a mutual fund for which the RR's
firm acts as a dealer
which of the following statements is not true of treasury stock? - CORRECT
ANSWER✔✔treasury stock has been issued by the US Treasury and was purchased by a
corporation
For a corporation that's in the 21% tax bracket, which of the following choices will provide the
best return if the corporation wants to invest some of its surplus cash? - CORRECT
ANSWER✔✔a preferred stock paying a 7.5% dividend
Which of the following proxy rules is TRUE regarding customer securities held in street name by
a brokerage firm? - CORRECT ANSWER✔✔the corporation sends the proxy to the brokerage
firm, which then sends it to the customer
According to anti-money laundering (AML) procedures, a member firm, when opening a new
account for a non-U.S. citizen, is required to obtain a: - CORRECT ANSWER✔✔passport number
and country of issuance
For customers who are subject to the alternative minimum tax, a registered representative
should understand the implications of investing in: - CORRECT ANSWER✔✔limited partnerships
, Which of the following statements is TRUE regarding a prime broker? - CORRECT ANSWER✔✔it
may execute and clear transactions and may also provide securities lending services to a hedge
fund
A corporation may choose to pay its shareholders with cash dividends or stock dividends. Which
of the following statements concerning the tax status of these events is the most accurate? -
CORRECT ANSWER✔✔while only the cash dividend is taxable when received, the receipt of
stock dividends will require the investor to adjust her cost basis
Required minimum distributions (RMDs) from a traditional IRA account must: - CORRECT
ANSWER✔✔Begin by April 1 of the year following the one in which the individual turns 72
Which of the following statements is NOT TRUE regarding discretionary accounts? - CORRECT
ANSWER✔✔a written power of attorney must be updated every three years
When liquidating a corporation's assets, in which order are claims satisfied? - CORRECT
ANSWER✔✔secured bondholders, general creditors, preferred stockholders and common
stockholders
An RR has a potential customer who is interested in international investing and sends the
person a prospectus for an international equity fund. The customer then visits the RR's office to
ask some questions about the types of risks that are associated with the fund. In order to help
the client understand the risks of the fund, which of the following actions may the RR perform?
- CORRECT ANSWER✔✔Provide the client with supplemental sales literature regarding the fund
When describing accounts for customers, all of the following are TRUE, EXCEPT: - CORRECT
ANSWER✔✔joint account information will be reported for both social security numbers on
Form 1099
Common and preferred stock are similar in that: - CORRECT ANSWER✔✔The dividends for both
must be declared by the board of directors
Correct Answers
A registered representative invites 20 retail clients to a seminar and allows each client to bring
one guest. The sale script that is used for the presentation is considered - CORRECT
ANSWER✔✔Retail communication
A registered representative will be soliciting customers to purchase low-priced equity securities.
A special disclosure document must be provided to customers if the securities are quoted on: -
CORRECT ANSWER✔✔The OTC Pink Marketplace
which of the following retirement plans need not set standards for vesting, eligibility and
funding? - CORRECT ANSWER✔✔deferred compensation plan
when analyzing the benefits of non-qualified deferred compensation plan, an individual would
consider that the plan would have all of the following characteristics Except - CORRECT
ANSWER✔✔the accumulated funds can be used as collateral when purchasing a new home
which of the following securities assist in the financing of import and export operations? -
CORRECT ANSWER✔✔Bankers' acceptances (BAs)
The factors that help determine a clients risk tolerance include:
I. Income
II. Age
III. Personality
IV. Net worth - CORRECT ANSWER✔✔all of the following help determine clients risk tolerance
,which of the following communications is NOT required to be filed with FINRA? - CORRECT
ANSWER✔✔communication sent only to clients that are registered investment advisers
which of the following persons is typically compensated by receiving a fee thats based on a
percentage of the assets under management? - CORRECT ANSWER✔✔an investment adviser
which of the following statements is true regarding numbered accounts? - CORRECT
ANSWER✔✔any type of account may be identified by a number, provided the customer's name
is on file
The sponsor of the Fenderbender Funds would like to publish some advertisements in several
personal finance magazines describing the past performance of the Fenderbender Balanced
Fund. In which of the following can the fund's performance be included?
I. A tombstone ad
II. An omitting prospectus ad
III. Generic advertising
IV. Supplementary sales literature - CORRECT ANSWER✔✔II. an omitting prospectus ad
IV. supplementary sales literature
A client is notified by his broker-dealer that certain trades may be executed by an Electronic
Communication Network (ECN). Which TWO of the following choices are risks of using this type
of system?
I. Trades are not subject to SRO regulations
II. There may be a limited ability to execute transactions
III. Higher commissions are possible
,IV. The system may only accept certain types of orders - CORRECT ANSWER✔✔II. There may be
a limited ability to execute transactions
IV. The system may only accept certain types of orders
whats the tax treatment of dividends if a corporation invests in the preferred or common shares
of another corporation? - CORRECT ANSWER✔✔65% of the dividends are excluded if ownership
exceeds 20%
Before being sent to customers, FINRA rules require approval by a principal of all of the
following EXCEPT: - CORRECT ANSWER✔✔a prospectus for a mutual fund for which the RR's
firm acts as a dealer
which of the following statements is not true of treasury stock? - CORRECT
ANSWER✔✔treasury stock has been issued by the US Treasury and was purchased by a
corporation
For a corporation that's in the 21% tax bracket, which of the following choices will provide the
best return if the corporation wants to invest some of its surplus cash? - CORRECT
ANSWER✔✔a preferred stock paying a 7.5% dividend
Which of the following proxy rules is TRUE regarding customer securities held in street name by
a brokerage firm? - CORRECT ANSWER✔✔the corporation sends the proxy to the brokerage
firm, which then sends it to the customer
According to anti-money laundering (AML) procedures, a member firm, when opening a new
account for a non-U.S. citizen, is required to obtain a: - CORRECT ANSWER✔✔passport number
and country of issuance
For customers who are subject to the alternative minimum tax, a registered representative
should understand the implications of investing in: - CORRECT ANSWER✔✔limited partnerships
, Which of the following statements is TRUE regarding a prime broker? - CORRECT ANSWER✔✔it
may execute and clear transactions and may also provide securities lending services to a hedge
fund
A corporation may choose to pay its shareholders with cash dividends or stock dividends. Which
of the following statements concerning the tax status of these events is the most accurate? -
CORRECT ANSWER✔✔while only the cash dividend is taxable when received, the receipt of
stock dividends will require the investor to adjust her cost basis
Required minimum distributions (RMDs) from a traditional IRA account must: - CORRECT
ANSWER✔✔Begin by April 1 of the year following the one in which the individual turns 72
Which of the following statements is NOT TRUE regarding discretionary accounts? - CORRECT
ANSWER✔✔a written power of attorney must be updated every three years
When liquidating a corporation's assets, in which order are claims satisfied? - CORRECT
ANSWER✔✔secured bondholders, general creditors, preferred stockholders and common
stockholders
An RR has a potential customer who is interested in international investing and sends the
person a prospectus for an international equity fund. The customer then visits the RR's office to
ask some questions about the types of risks that are associated with the fund. In order to help
the client understand the risks of the fund, which of the following actions may the RR perform?
- CORRECT ANSWER✔✔Provide the client with supplemental sales literature regarding the fund
When describing accounts for customers, all of the following are TRUE, EXCEPT: - CORRECT
ANSWER✔✔joint account information will be reported for both social security numbers on
Form 1099
Common and preferred stock are similar in that: - CORRECT ANSWER✔✔The dividends for both
must be declared by the board of directors
