Series 7 exam 2025 Questions and
Answers
A new stock issue may begin trading on NASDAQ - ANSWER✔✔-following the opening trade on
the morning of the effective date
Place the following in their proper order in the handling of an order. - ANSWER✔✔-Wire room,
purchase and sale, margin and cashier (wet pups surf in Malibu)
A restricted margin account is one in which - ANSWER✔✔-The equity is less than reg-T (50%)
Underwriting compensation in IPOs is subject to a thorough review by FINRA. Finra will make a
definitive ruling on the fairness and reasonability of each of the following issue attributes with the
exception of: - ANSWER✔✔-The POP of new shares
As the result of a client complaint involving accusations of churning, and allegations of
unauthorized trades, a duly qualified panel of arbitrators has heard the case and rendered its ruling
against the registered rep on all counts, as well as the branch manager and the member firm for
failure to supervise. FINRA rules set forth the normal procedure for the filing of an appeal to the
adverse ruling with which of the following? - ANSWER✔✔-Arbitrate ruling can not be appealed
The most volatile of the money market rates shown below is the: - ANSWER✔✔-Fed Funds Rate
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,One of your customers who is an active trader and is a student of technical analysis has called you to
discuss his findings regarding the price action on MMM common. He believes that it is fast
approaching its resistance level of 60. If he does not think the stock will break out, which of the
below would be most appropriate? - ANSWER✔✔-Sell most or all current long positions
The stock of which of the following listed corporations is generally considered the most sensitive to
interest rate changes? - ANSWER✔✔-Public Utility
Which of the following mutual funds would be most suitable for the client seeking stability of
capital? - ANSWER✔✔-Balance fund is the definition of stability of capital
An investment in United States Treasury bonds may be subject to which of the following taxes? -
ANSWER✔✔-Capital gain and Federal Income tax
Direct institution to institution securities transactions are considered - ANSWER✔✔-4th market
The Daily Bond Buyer publishes information about the municipal securities business including the
volume of new municipal issues coming to market over the next 30 days. This is referred to as: -
ANSWER✔✔-The visible supply
Uncovered short put exercise results in - ANSWER✔✔-acquisition of shares with a resulting cost
basis of strike price less premium
A Eurodollar bond has each of the following characteristics except: - ANSWER✔✔-interest
payments may be made in either US dollars or the currency of the nation in which the bond was
issued. (can only be paid in US dollars)
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
, Compute the taxable or corporate equivalent yield for a 4.5% GO in the portfolio of an investor in
the 36% tax bracket. - ANSWER✔✔-Municipal yield divided by (100% minus investor's tax
bracket)= 4.5% divided by (100% minus 36%)= 4.5% divided by 64%= 7.03%
The breadth of the market is measured by the - ANSWER✔✔-Advance/decline ratio (advancing
stocks and declining stocks)
A margin account customer buys 100 shares of JKS common at 80 and deposits the required Reg. T
margin. A week later with JKS at 90, the account has SMA of: - ANSWER✔✔-The initial purchase
of $8,000 at 50% Reg. T requires a down payment of $4,000 and creates a loan from the broker to
the client of $4,000, referred to as the customer's debit balance. With the stock rising to 90, the
CMV is now $9,000 while the debit balance does not change.The client's new equity is $5,000, found
by taking CMV minus debit balance = $9,000 minus $4,000.However, Reg. T only requires equity of
50% of CMV, which on a $9,000 position is a Reg. T required equity of $4,500.Your client's equity
of $5,000 exceeds Reg. T by $500.The new equity of $5,000 minus the Reg. T equity of $4,500 =
$500. This $500 is commonly referred to as SMA, and is also called excess equity, also called Reg. T
excess, and is also referred to as the client's 'line of credit.'
A client of yours with a conservative level of tolerance for systematic risk and a fairly long time
horizon has indicated that she would prefer to avoid substantial portfolio turnover. Your suitable
recommendation would most likely be: - ANSWER✔✔-Passive (infrequent trading)
Mrs. Ko's portfolio has an aggressive bias towards growth stocks. As such, its beta is 1.4 and she is
concerned about downside exposure due to overall market risk over the near term. The S&P 500
Index is currently at 2000.00 and her portfolio has a current market value of $1,000,000. Which of
the following recommendations would provide the best hedge? - ANSWER✔✔-The S&P 500 has a
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
Answers
A new stock issue may begin trading on NASDAQ - ANSWER✔✔-following the opening trade on
the morning of the effective date
Place the following in their proper order in the handling of an order. - ANSWER✔✔-Wire room,
purchase and sale, margin and cashier (wet pups surf in Malibu)
A restricted margin account is one in which - ANSWER✔✔-The equity is less than reg-T (50%)
Underwriting compensation in IPOs is subject to a thorough review by FINRA. Finra will make a
definitive ruling on the fairness and reasonability of each of the following issue attributes with the
exception of: - ANSWER✔✔-The POP of new shares
As the result of a client complaint involving accusations of churning, and allegations of
unauthorized trades, a duly qualified panel of arbitrators has heard the case and rendered its ruling
against the registered rep on all counts, as well as the branch manager and the member firm for
failure to supervise. FINRA rules set forth the normal procedure for the filing of an appeal to the
adverse ruling with which of the following? - ANSWER✔✔-Arbitrate ruling can not be appealed
The most volatile of the money market rates shown below is the: - ANSWER✔✔-Fed Funds Rate
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,One of your customers who is an active trader and is a student of technical analysis has called you to
discuss his findings regarding the price action on MMM common. He believes that it is fast
approaching its resistance level of 60. If he does not think the stock will break out, which of the
below would be most appropriate? - ANSWER✔✔-Sell most or all current long positions
The stock of which of the following listed corporations is generally considered the most sensitive to
interest rate changes? - ANSWER✔✔-Public Utility
Which of the following mutual funds would be most suitable for the client seeking stability of
capital? - ANSWER✔✔-Balance fund is the definition of stability of capital
An investment in United States Treasury bonds may be subject to which of the following taxes? -
ANSWER✔✔-Capital gain and Federal Income tax
Direct institution to institution securities transactions are considered - ANSWER✔✔-4th market
The Daily Bond Buyer publishes information about the municipal securities business including the
volume of new municipal issues coming to market over the next 30 days. This is referred to as: -
ANSWER✔✔-The visible supply
Uncovered short put exercise results in - ANSWER✔✔-acquisition of shares with a resulting cost
basis of strike price less premium
A Eurodollar bond has each of the following characteristics except: - ANSWER✔✔-interest
payments may be made in either US dollars or the currency of the nation in which the bond was
issued. (can only be paid in US dollars)
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
, Compute the taxable or corporate equivalent yield for a 4.5% GO in the portfolio of an investor in
the 36% tax bracket. - ANSWER✔✔-Municipal yield divided by (100% minus investor's tax
bracket)= 4.5% divided by (100% minus 36%)= 4.5% divided by 64%= 7.03%
The breadth of the market is measured by the - ANSWER✔✔-Advance/decline ratio (advancing
stocks and declining stocks)
A margin account customer buys 100 shares of JKS common at 80 and deposits the required Reg. T
margin. A week later with JKS at 90, the account has SMA of: - ANSWER✔✔-The initial purchase
of $8,000 at 50% Reg. T requires a down payment of $4,000 and creates a loan from the broker to
the client of $4,000, referred to as the customer's debit balance. With the stock rising to 90, the
CMV is now $9,000 while the debit balance does not change.The client's new equity is $5,000, found
by taking CMV minus debit balance = $9,000 minus $4,000.However, Reg. T only requires equity of
50% of CMV, which on a $9,000 position is a Reg. T required equity of $4,500.Your client's equity
of $5,000 exceeds Reg. T by $500.The new equity of $5,000 minus the Reg. T equity of $4,500 =
$500. This $500 is commonly referred to as SMA, and is also called excess equity, also called Reg. T
excess, and is also referred to as the client's 'line of credit.'
A client of yours with a conservative level of tolerance for systematic risk and a fairly long time
horizon has indicated that she would prefer to avoid substantial portfolio turnover. Your suitable
recommendation would most likely be: - ANSWER✔✔-Passive (infrequent trading)
Mrs. Ko's portfolio has an aggressive bias towards growth stocks. As such, its beta is 1.4 and she is
concerned about downside exposure due to overall market risk over the near term. The S&P 500
Index is currently at 2000.00 and her portfolio has a current market value of $1,000,000. Which of
the following recommendations would provide the best hedge? - ANSWER✔✔-The S&P 500 has a
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
