FINRA SERIES 7 EXAM FULL
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 - ✔️
✔️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
D. Requires affected taxpayers to calculate their income tax in two ways and
pay the lower amount - ✔️ ✔A️. 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 - ✔️ ✔B️ . 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 - ✔️
✔️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 - ✔️
✔B️. 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 - ✔️
✔B️. $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 - ✔️✔️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 - ✔️
✔️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 - ✔️
✔️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 - ✔️
✔️A. $13.75
Joanna is a registered representative who works from her vacation home
occasionally. What is the maximum number of business days she can work
from her vacation home without it being classified as a branch office?
A. Less than 50
B. Less than 20
C. Less than 30
D. Less than 60 - ✔️
✔C️. Less than 30
A trade confirmation must be sent on or before the settlement date in all of
these instances except?
A. Customer purchases shares in a dividend reinvestment plan
B. Customer purchases a when-issued municipal
C. Customer is at office when trade takes place and sees it
D. Customer sells a mutual fund - ✔️
✔️A. Customer purchases shares in a
dividend reinvestment plan
A customer must receive a trade confirmation for most transactions. For
dividend reinvestment plans, a quarterly account statement may replace an
immediate trade confirmation with advance written notice to the customer.
The account statements should disclose all the information required in 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 - ✔️
✔️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
D. Requires affected taxpayers to calculate their income tax in two ways and
pay the lower amount - ✔️ ✔A️. 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 - ✔️ ✔B️ . 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 - ✔️
✔️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 - ✔️
✔B️. 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 - ✔️
✔B️. $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 - ✔️✔️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 - ✔️
✔️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 - ✔️
✔️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 - ✔️
✔️A. $13.75
Joanna is a registered representative who works from her vacation home
occasionally. What is the maximum number of business days she can work
from her vacation home without it being classified as a branch office?
A. Less than 50
B. Less than 20
C. Less than 30
D. Less than 60 - ✔️
✔C️. Less than 30
A trade confirmation must be sent on or before the settlement date in all of
these instances except?
A. Customer purchases shares in a dividend reinvestment plan
B. Customer purchases a when-issued municipal
C. Customer is at office when trade takes place and sees it
D. Customer sells a mutual fund - ✔️
✔️A. Customer purchases shares in a
dividend reinvestment plan
A customer must receive a trade confirmation for most transactions. For
dividend reinvestment plans, a quarterly account statement may replace an
immediate trade confirmation with advance written notice to the customer.
The account statements should disclose all the information required in a
