FINRA SERIES 7 EXAM COMPREHENSIVE
STUDY GUIDE COMPLETE QUESTIONS
⫸ 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
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
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
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
, Interval funds are a type of investment company that offers higher yields
but permits shareholders to sell their shares only at specific time periods
or "intervals." Legally classified as a closed-end fund, interval funds
share characteristics with mutual funds such as the fact that there is no
trading or secondary market for interval funds; instead shares must be
purchased and sold (redeemed) with the fund. An investment in an
interval fund is much less liquid than shares in other types of investment
companies, such as mutual funds, closed-end funds, and ETFs.
⫸ Which of the following would you be the least interested in looking
at to analyze a revenue bond?
A. Flow of funds
B. Net overall debt per capita
C. Protective covenants
D. Feasibility study Answer: B. Net overall debt per capita
⫸ A corporate bond has a coupon rate of 2.75%. What is the amount of
a single semiannual interest payment?
A. $13.75
B. $27.50
C. $275.00
D. $137.50 Answer: A. $13.75
STUDY GUIDE COMPLETE QUESTIONS
⫸ 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
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
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
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
, Interval funds are a type of investment company that offers higher yields
but permits shareholders to sell their shares only at specific time periods
or "intervals." Legally classified as a closed-end fund, interval funds
share characteristics with mutual funds such as the fact that there is no
trading or secondary market for interval funds; instead shares must be
purchased and sold (redeemed) with the fund. An investment in an
interval fund is much less liquid than shares in other types of investment
companies, such as mutual funds, closed-end funds, and ETFs.
⫸ Which of the following would you be the least interested in looking
at to analyze a revenue bond?
A. Flow of funds
B. Net overall debt per capita
C. Protective covenants
D. Feasibility study Answer: B. Net overall debt per capita
⫸ A corporate bond has a coupon rate of 2.75%. What is the amount of
a single semiannual interest payment?
A. $13.75
B. $27.50
C. $275.00
D. $137.50 Answer: A. $13.75
