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FINRA Series 7 EXAM | WITH COMPLETE QUESTIONS AND ANSWERS
| 2025/206 LATEST UPDATED | 100 % RATED AND VERIFIED
SOLUTIONS | GET AN A+
STRIPS may be attractive to investors for which of the following reasons?
A. They offer semi-annual interest payments
B. The securities are tax-free until they mature
C. They carry almost no reinvestment risk
D. They are offered at only a 20 year maturity which is a maturity that is not offered by
traditional Treasury securities - (ANSWER)C. They carry almost no reinvestment risk
The Alternative Minimum Tax (AMT):
A. Adds back in certain "tax preference items" that are deducted for purposes of regular income
tax
B. Is designed to ensure that residents of states with high taxes do not pay more tax as a
percentage of income than residents of states with lower taxes
C. Affects both corporate and individual income tax
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D. Requires affected taxpayers to calculate their income tax in two ways and pay the lower
amount - (ANSWER)A. Adds back in certain "tax preference items" that are deducted for
purposes of regular income tax
A wash sale occurs when:
A. Contemporaneous purchases are made for the same security
B. A sale of a security at a capital loss occurs fewer than 30 days prior to the purchase of the
same or a similar security
C. Any sale of a security occurs within 30 days of a purchase of the same or a similar security
D. An investor reports capital gains and losses for securities issued by the same company in the
same tax year - (ANSWER)B. A sale of a security at a capital loss occurs fewer than 30 days
prior to the purchase of the same or a similar security
403(b) plans are available to the following groups of people:
I. Government employees
II. Employees of public educational institutions
III. Employees of nonprofit organizations
IV. Self-employed individuals
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A. II and III
B. I and II
C. I and IV
D. III and IV - (ANSWER)A. II and III
The writer of a put has:
A. The right to sell
B. The obligation to buy
C. The obligation to sell
D. The right to buy - (ANSWER)B. The obligation to buy
Marilyn writes an ABC Aug20 put @ 4. What is the maximum amount she could lose on this
option?
A. $2,000
B. $1,600
C. Unlimited
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D. $400 - (ANSWER)B. $1,600
For a call option, the strike price is:
A. The market value of the underlying security at which the option must be exercised
B. The price at which the call holder can buy the underlying security from the call writer
C. The price at which the call writer must buy the underlying securities from the call holder
D. The breakeven point for the holder of the option - (ANSWER)B. The price at which the call
holder can buy the underlying security from the call writer
An interval fund is a type of investment company that is:
A. Redeemable at any time
B. Must be purchased in periodic intervals
C. Highly liquid
D. Legally classified as a closed-end fund - (ANSWER)D. Legally classified as a closed-end
fund
FINRA Series 7 EXAM | WITH COMPLETE QUESTIONS AND ANSWERS
| 2025/206 LATEST UPDATED | 100 % RATED AND VERIFIED
SOLUTIONS | GET AN A+
STRIPS may be attractive to investors for which of the following reasons?
A. They offer semi-annual interest payments
B. The securities are tax-free until they mature
C. They carry almost no reinvestment risk
D. They are offered at only a 20 year maturity which is a maturity that is not offered by
traditional Treasury securities - (ANSWER)C. They carry almost no reinvestment risk
The Alternative Minimum Tax (AMT):
A. Adds back in certain "tax preference items" that are deducted for purposes of regular income
tax
B. Is designed to ensure that residents of states with high taxes do not pay more tax as a
percentage of income than residents of states with lower taxes
C. Affects both corporate and individual income tax
,2|Page
D. Requires affected taxpayers to calculate their income tax in two ways and pay the lower
amount - (ANSWER)A. Adds back in certain "tax preference items" that are deducted for
purposes of regular income tax
A wash sale occurs when:
A. Contemporaneous purchases are made for the same security
B. A sale of a security at a capital loss occurs fewer than 30 days prior to the purchase of the
same or a similar security
C. Any sale of a security occurs within 30 days of a purchase of the same or a similar security
D. An investor reports capital gains and losses for securities issued by the same company in the
same tax year - (ANSWER)B. A sale of a security at a capital loss occurs fewer than 30 days
prior to the purchase of the same or a similar security
403(b) plans are available to the following groups of people:
I. Government employees
II. Employees of public educational institutions
III. Employees of nonprofit organizations
IV. Self-employed individuals
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A. II and III
B. I and II
C. I and IV
D. III and IV - (ANSWER)A. II and III
The writer of a put has:
A. The right to sell
B. The obligation to buy
C. The obligation to sell
D. The right to buy - (ANSWER)B. The obligation to buy
Marilyn writes an ABC Aug20 put @ 4. What is the maximum amount she could lose on this
option?
A. $2,000
B. $1,600
C. Unlimited
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D. $400 - (ANSWER)B. $1,600
For a call option, the strike price is:
A. The market value of the underlying security at which the option must be exercised
B. The price at which the call holder can buy the underlying security from the call writer
C. The price at which the call writer must buy the underlying securities from the call holder
D. The breakeven point for the holder of the option - (ANSWER)B. The price at which the call
holder can buy the underlying security from the call writer
An interval fund is a type of investment company that is:
A. Redeemable at any time
B. Must be purchased in periodic intervals
C. Highly liquid
D. Legally classified as a closed-end fund - (ANSWER)D. Legally classified as a closed-end
fund
