Series 7 STC Exam Questions with
Correct Answers 100% Pass
When an arbitrator has decided to expunge (remove) customer dispute-related
information from the Central Registry Depository (CRD): - ANSWER✔✔-it's
permanently deleted and not available to the public, regulators, or prospective
employers
The market price for a closed-end investment company is based upon: - ANSWER✔✔-
supply and demand for the shares in the marketplace. A closed-end investment
company share may sell at, above, or below its net asset value.
What type of bond is issued as a municipal bond and qualifies as a private activity
bond, but may not provide tax-exempt interest to certain investors? - ANSWER✔✔-
AMT bond
required to pay tax on the interest received from a private activity bond. The AMT rules
are enacted to ensure that higher income individuals pay a specified minimum amount
of tax
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,Which of the following is generally the largest portion of an underwriting spread? -
ANSWER✔✔-Selling concession
If securities are received as a gift, how is the cost basis determined? - ANSWER✔✔-It's
the lesser of the market value or the donor's cost basis.
FINRA's website address must be provided to each customer: - ANSWER✔✔-Annually
For individual investors, the interest derived from state-issued municipal bonds is
exempt from federal income tax. The investor may be subject to state income tax;
however: - ANSWER✔✔-It depends on the tax status of the investor's home state
The Jumpstart Our Business Startups (JOBS) Act established: - ANSWER✔✔-the rules
for small businesses to raise capital using the internet through a process that's referred
to as crowdfunding. Funds can only be received through an SEC-registered funding
portal that's established by a FINRA member. Funds cannot be sent directly to the
broker-dealer or the issuer.
All margin accounts are required to have their values calculated at the close of trading
on each business day. This procedure is referred to as: - ANSWER✔✔-Marking-to-the-
market
As a result of falling interest rates, a significant number of bonds that are held by a
bond fund have been called. Rather than reinvesting money, the fund has distributed
the proceeds to its shareholders as a return of capital. How will this distribution be
taxed to the shareholders? - ANSWER✔✔-It's not taxed since it's a return of cost basis.
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 2/22
, Both a wash sale and a bond tax swap involve an investor selling a bond for a loss, then
repurchasing another bond to replace it. The bond tax swap allows an investor to -
ANSWER✔✔-deduct her loss; however, the wash sale rule (if triggered) disallows the
loss and doesn't allow the loss to be deducted. In order to avoid the wash sale rule, an
investor must repurchase a bond with material differences (e.g., a different interest rate
and/or maturity date).
Clients who want to reduce their tax liability may invest in which of the following? -
ANSWER✔✔-Traditional IRAs and limited partnerships
What information would NOT need to be disclosed by a broker-dealer in a research
report?
-The broker-dealer received compensation for assisting the company in an acquisition
-The analyst provided a target price for the company
-The analyst is a director of the company
-The analyst had owned shares in the company one year before writing the report -
ANSWER✔✔--The analyst had owned shares in the company one year before writing
the report
A broker-dealer is not required to respond to complaints that are delivered: -
ANSWER✔✔-Orally
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 3/22
Correct Answers 100% Pass
When an arbitrator has decided to expunge (remove) customer dispute-related
information from the Central Registry Depository (CRD): - ANSWER✔✔-it's
permanently deleted and not available to the public, regulators, or prospective
employers
The market price for a closed-end investment company is based upon: - ANSWER✔✔-
supply and demand for the shares in the marketplace. A closed-end investment
company share may sell at, above, or below its net asset value.
What type of bond is issued as a municipal bond and qualifies as a private activity
bond, but may not provide tax-exempt interest to certain investors? - ANSWER✔✔-
AMT bond
required to pay tax on the interest received from a private activity bond. The AMT rules
are enacted to ensure that higher income individuals pay a specified minimum amount
of tax
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 1/22
,Which of the following is generally the largest portion of an underwriting spread? -
ANSWER✔✔-Selling concession
If securities are received as a gift, how is the cost basis determined? - ANSWER✔✔-It's
the lesser of the market value or the donor's cost basis.
FINRA's website address must be provided to each customer: - ANSWER✔✔-Annually
For individual investors, the interest derived from state-issued municipal bonds is
exempt from federal income tax. The investor may be subject to state income tax;
however: - ANSWER✔✔-It depends on the tax status of the investor's home state
The Jumpstart Our Business Startups (JOBS) Act established: - ANSWER✔✔-the rules
for small businesses to raise capital using the internet through a process that's referred
to as crowdfunding. Funds can only be received through an SEC-registered funding
portal that's established by a FINRA member. Funds cannot be sent directly to the
broker-dealer or the issuer.
All margin accounts are required to have their values calculated at the close of trading
on each business day. This procedure is referred to as: - ANSWER✔✔-Marking-to-the-
market
As a result of falling interest rates, a significant number of bonds that are held by a
bond fund have been called. Rather than reinvesting money, the fund has distributed
the proceeds to its shareholders as a return of capital. How will this distribution be
taxed to the shareholders? - ANSWER✔✔-It's not taxed since it's a return of cost basis.
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 2/22
, Both a wash sale and a bond tax swap involve an investor selling a bond for a loss, then
repurchasing another bond to replace it. The bond tax swap allows an investor to -
ANSWER✔✔-deduct her loss; however, the wash sale rule (if triggered) disallows the
loss and doesn't allow the loss to be deducted. In order to avoid the wash sale rule, an
investor must repurchase a bond with material differences (e.g., a different interest rate
and/or maturity date).
Clients who want to reduce their tax liability may invest in which of the following? -
ANSWER✔✔-Traditional IRAs and limited partnerships
What information would NOT need to be disclosed by a broker-dealer in a research
report?
-The broker-dealer received compensation for assisting the company in an acquisition
-The analyst provided a target price for the company
-The analyst is a director of the company
-The analyst had owned shares in the company one year before writing the report -
ANSWER✔✔--The analyst had owned shares in the company one year before writing
the report
A broker-dealer is not required to respond to complaints that are delivered: -
ANSWER✔✔-Orally
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 3/22
