Series 7 Exam – Mock Questions LATEST
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1. Which of the following securities is considered a debt instrument?
A. Common stock
B. Corporate bond
C. Mutual fund
D. Option
Corporate bonds are debt instruments because the issuer borrows money from investors
and pays interest until maturity.
2. A customer wants to invest $10,000 in a security that provides guaranteed income and
principal protection. Which security is most appropriate?
A. Common stock
B. Corporate bond
C. Certificate of deposit (CD)
D. Municipal bond
CDs provide a guaranteed return of principal and fixed interest, making them suitable for
conservative investors.
3. An investor buys 100 shares of a stock at $50 per share and sells a call option with a $55
strike price. This is known as:
A. Protective put
B. Covered call
C. Naked call
D. Long straddle
Writing a call while owning the underlying stock limits upside profit but provides
premium income.
4. Which of the following best describes a 12b-1 fee in a mutual fund?
A. Management fee
B. Marketing and distribution fee
C. Redemption fee
D. Front-end load
12b-1 fees are ongoing fees used to pay for marketing, distribution, and sometimes
shareholder service costs.
5. Which type of order guarantees execution but not price?
A. Limit order
B. Stop order
C. Market order
D. Stop-limit order
, Market orders execute immediately at the current market price, which may fluctuate
before execution.
6. A bond has a $1,000 par value, 6% coupon, and 10 years to maturity. The current yield is
6%. What is the bond’s price?
A. $900
B. $950
C. $1,000
D. $1,050
Current yield = annual interest / price. If current yield equals the coupon rate, the bond
trades at par.
7. Which of the following orders is used to protect a profit in a rising stock?
A. Market order
B. Buy stop
C. Sell stop
D. Buy limit
A sell stop is placed below the current market price to protect gains if the stock declines.
8. A municipal bond that is exempt from federal taxes but subject to state taxes is known as:
A. General obligation bond
B. Non-qualified bond
C. Revenue bond
D. Taxable municipal bond
Some municipal bonds are federally tax-exempt but not state-exempt, depending on the
investor’s residency.
9. A company issues 1,000 new shares of stock and sells them at $20 per share. The market
price is $25. What type of offering is this?
A. Secondary offering
B. Primary offering
C. Rights offering
D. Private placement
Primary offerings involve the sale of new securities by the issuer to raise capital.
10. Which of the following securities is most sensitive to interest rate changes?
A. Short-term corporate bond
B. Preferred stock
C. Long-term zero-coupon bond
D. Money market fund
Long-term zero-coupon bonds have the greatest duration, making them highly sensitive
to interest rate fluctuations.
11. An investor wants to hedge against a potential decline in the stock market. Which
strategy is appropriate?
A. Buy calls
B. Buy stock
C. Buy puts
D. Write calls
Buying put options increases in value when the underlying stock or index declines,
providing downside protection.
, 12. Under FINRA rules, a registered representative must provide which of the following to a
new customer?
A. Monthly portfolio statements
B. Customer account agreement
C. Tax advice
D. Investment guarantees
Customer account agreements outline the terms of trading and regulatory compliance.
13. Which of the following describes a revenue bond?
A. Backed by the full faith and credit of the issuer
B. Short-term municipal debt
C. Paid from a specific project’s income
D. Corporate debt
Revenue bonds are secured by revenues from specific projects, such as toll roads or
utilities.
14. An investor receives a dividend on a stock. How is this dividend taxed if held in a taxable
account?
A. Tax-free
B. As ordinary income (or qualified dividends if conditions met)
C. As capital gains
D. Not reported
Dividends are generally taxable in the year received. Qualified dividends may be taxed at
a lower rate.
15. Which of the following describes an American-style option?
A. Can only be exercised at expiration
B. Can be exercised any time before expiration
C. Settles in cash only
D. Traded OTC only
American-style options offer flexibility to exercise any time up to expiration.
16. A customer purchases 100 shares of a stock at $40 per share and sells a put option with a
$35 strike price. This strategy is:
A. Protective put
B. Naked call
C. Covered put
D. Long straddle
Selling a put while holding stock is not standard; this question may reflect a complex
covered strategy (note: typically “covered put” involves short stock).
17. Which of the following is NOT a characteristic of preferred stock?
A. Fixed dividend
B. Voting rights
C. Par value
D. Priority over common stock in liquidation
Preferred stockholders generally do not have voting rights unless specified.
18. A client wants to invest in a diversified portfolio that trades like a stock. Which is most
suitable?
A. Closed-end fund
B. Open-end mutual fund
2026 UPDATE FAST REVIWED FROM
ACTUAL TEST 150 QUESTIONS AND
100% VERIFIED ANSWERS| A+ GRADE
Q&A | INSTANT DOWNLOAD PDF
1. Which of the following securities is considered a debt instrument?
A. Common stock
B. Corporate bond
C. Mutual fund
D. Option
Corporate bonds are debt instruments because the issuer borrows money from investors
and pays interest until maturity.
2. A customer wants to invest $10,000 in a security that provides guaranteed income and
principal protection. Which security is most appropriate?
A. Common stock
B. Corporate bond
C. Certificate of deposit (CD)
D. Municipal bond
CDs provide a guaranteed return of principal and fixed interest, making them suitable for
conservative investors.
3. An investor buys 100 shares of a stock at $50 per share and sells a call option with a $55
strike price. This is known as:
A. Protective put
B. Covered call
C. Naked call
D. Long straddle
Writing a call while owning the underlying stock limits upside profit but provides
premium income.
4. Which of the following best describes a 12b-1 fee in a mutual fund?
A. Management fee
B. Marketing and distribution fee
C. Redemption fee
D. Front-end load
12b-1 fees are ongoing fees used to pay for marketing, distribution, and sometimes
shareholder service costs.
5. Which type of order guarantees execution but not price?
A. Limit order
B. Stop order
C. Market order
D. Stop-limit order
, Market orders execute immediately at the current market price, which may fluctuate
before execution.
6. A bond has a $1,000 par value, 6% coupon, and 10 years to maturity. The current yield is
6%. What is the bond’s price?
A. $900
B. $950
C. $1,000
D. $1,050
Current yield = annual interest / price. If current yield equals the coupon rate, the bond
trades at par.
7. Which of the following orders is used to protect a profit in a rising stock?
A. Market order
B. Buy stop
C. Sell stop
D. Buy limit
A sell stop is placed below the current market price to protect gains if the stock declines.
8. A municipal bond that is exempt from federal taxes but subject to state taxes is known as:
A. General obligation bond
B. Non-qualified bond
C. Revenue bond
D. Taxable municipal bond
Some municipal bonds are federally tax-exempt but not state-exempt, depending on the
investor’s residency.
9. A company issues 1,000 new shares of stock and sells them at $20 per share. The market
price is $25. What type of offering is this?
A. Secondary offering
B. Primary offering
C. Rights offering
D. Private placement
Primary offerings involve the sale of new securities by the issuer to raise capital.
10. Which of the following securities is most sensitive to interest rate changes?
A. Short-term corporate bond
B. Preferred stock
C. Long-term zero-coupon bond
D. Money market fund
Long-term zero-coupon bonds have the greatest duration, making them highly sensitive
to interest rate fluctuations.
11. An investor wants to hedge against a potential decline in the stock market. Which
strategy is appropriate?
A. Buy calls
B. Buy stock
C. Buy puts
D. Write calls
Buying put options increases in value when the underlying stock or index declines,
providing downside protection.
, 12. Under FINRA rules, a registered representative must provide which of the following to a
new customer?
A. Monthly portfolio statements
B. Customer account agreement
C. Tax advice
D. Investment guarantees
Customer account agreements outline the terms of trading and regulatory compliance.
13. Which of the following describes a revenue bond?
A. Backed by the full faith and credit of the issuer
B. Short-term municipal debt
C. Paid from a specific project’s income
D. Corporate debt
Revenue bonds are secured by revenues from specific projects, such as toll roads or
utilities.
14. An investor receives a dividend on a stock. How is this dividend taxed if held in a taxable
account?
A. Tax-free
B. As ordinary income (or qualified dividends if conditions met)
C. As capital gains
D. Not reported
Dividends are generally taxable in the year received. Qualified dividends may be taxed at
a lower rate.
15. Which of the following describes an American-style option?
A. Can only be exercised at expiration
B. Can be exercised any time before expiration
C. Settles in cash only
D. Traded OTC only
American-style options offer flexibility to exercise any time up to expiration.
16. A customer purchases 100 shares of a stock at $40 per share and sells a put option with a
$35 strike price. This strategy is:
A. Protective put
B. Naked call
C. Covered put
D. Long straddle
Selling a put while holding stock is not standard; this question may reflect a complex
covered strategy (note: typically “covered put” involves short stock).
17. Which of the following is NOT a characteristic of preferred stock?
A. Fixed dividend
B. Voting rights
C. Par value
D. Priority over common stock in liquidation
Preferred stockholders generally do not have voting rights unless specified.
18. A client wants to invest in a diversified portfolio that trades like a stock. Which is most
suitable?
A. Closed-end fund
B. Open-end mutual fund
