SIMULATION TEST ANSWERS SERIES 7 257QUESTIONS WITH CORRECT ANSWERS

According to the FINRA rules on Private Security transactions. An associated person entering into a series of private transactions without compensations must provide to the member firm all of the following except CORRECT ANSWER A written notice on each transaction Long 1000 Shares at 20, short 1000 shares at 10, What is the minimum maintenance on these positions? CORRECT ANSWER $10,000 Bill took a loan against his variable life policy several years ago. Because of poor investment performance the policy's cash value has dropped to a negative value, what are Bill's options? CORRECT ANSWER He has 31 days to pay back enough of the loan to bring the cash value positive. According to MSRB rules, a control relationship exists between a municipal b/d and an issuer when CORRECT ANSWER An officer of the underwriter is in a position of authority over the issuer An account under the UGMA earned $8500 in interest income from bonds. Minor is 13 y/o. How is this interest income taxed? CORRECT ANSWER A portion is taxed at the minor's rate and a portion is taxed at the parent's rate Is there a maximum award to a full arbitration hearing? CORRECT ANSWER No An investor wishes to invest $50,000 into a diversified portfolio of stocks, bonds and money market securities, he wants to shift the percentages invested in each category as market conditions change but does not believe he has the time or resources to make appropriate adjustments, which of the following mutual funds would best suit him? CORRECT ANSWER Asset allocation fund How are funds contributed to a 403(b) treated for taxation? CORRECT ANSWER Not included as income for the employee but taxed as income upon distribution The market value is $12,000. Debit balance is $5500, what is the buying power? CORRECT ANSWER $1000 Variable life policy provisions allow for CORRECT ANSWER Changing among investment alternatives in separate account with tax liabilities. Converting to a whole life policy What is not included in a fund's prospectus? CORRECT ANSWER The fund's current portfolio of securities