Series 7 Suitability Exam 2025
Questions and Answers
common stock - ANSWER✔✔-suitable for investors seeking long-term growth (capital
appreciation) and the opportunity to outpace inflation
preferred stock - ANSWER✔✔-suitable for investors seeking stable dividend income
with returns that are comparable to long-term bonds
growth stock - ANSWER✔✔-suitable for investors seeking long-term growth and
retirement savings; good hedge against inflation
utility stock - ANSWER✔✔-suitable for investors seeking stable dividend income (i.e.,
older or retired investors)
american depositary receipt (ADR) - ANSWER✔✔-suitable for investors seeking to
invest in foreign companies (similar to U.S. common stock)
bond - ANSWER✔✔-suitable for older and/or more conservative investors who want
consistent income
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, corporate bond - ANSWER✔✔-suitable for investors seeking current income for a
specific period
convertible bond - ANSWER✔✔-suitable for investors seeking income with the
potential for long-term growth (the relative safety of a bond, with the growth potential
of the underlying stock)
zero-coupon bond - ANSWER✔✔-suitable for investors seeking an investment that is
less risky than equities and provides predictable growth (use for retirement planning or
college funding)
high-yield bond (junk bond) - ANSWER✔✔-suitable for high-risk, speculative investors
money market instruments - ANSWER✔✔-suitable for investors seeking conservative
investments for short-term needs; used to hold funds safely until needed or invested for
a longer term
municipal bond - ANSWER✔✔-suitable for investors who are in high tax brackets and
are seeking tax-exempt interest income
private activity/industrial development bond - ANSWER✔✔-suitable for investors
seeking a higher yielding municipal bond and are not subject to the alternative
minimum tax (AMT)
variable rate demand obligation (VRDO) - ANSWER✔✔-suitable for conservative
investors seeking income
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
Questions and Answers
common stock - ANSWER✔✔-suitable for investors seeking long-term growth (capital
appreciation) and the opportunity to outpace inflation
preferred stock - ANSWER✔✔-suitable for investors seeking stable dividend income
with returns that are comparable to long-term bonds
growth stock - ANSWER✔✔-suitable for investors seeking long-term growth and
retirement savings; good hedge against inflation
utility stock - ANSWER✔✔-suitable for investors seeking stable dividend income (i.e.,
older or retired investors)
american depositary receipt (ADR) - ANSWER✔✔-suitable for investors seeking to
invest in foreign companies (similar to U.S. common stock)
bond - ANSWER✔✔-suitable for older and/or more conservative investors who want
consistent income
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
, corporate bond - ANSWER✔✔-suitable for investors seeking current income for a
specific period
convertible bond - ANSWER✔✔-suitable for investors seeking income with the
potential for long-term growth (the relative safety of a bond, with the growth potential
of the underlying stock)
zero-coupon bond - ANSWER✔✔-suitable for investors seeking an investment that is
less risky than equities and provides predictable growth (use for retirement planning or
college funding)
high-yield bond (junk bond) - ANSWER✔✔-suitable for high-risk, speculative investors
money market instruments - ANSWER✔✔-suitable for investors seeking conservative
investments for short-term needs; used to hold funds safely until needed or invested for
a longer term
municipal bond - ANSWER✔✔-suitable for investors who are in high tax brackets and
are seeking tax-exempt interest income
private activity/industrial development bond - ANSWER✔✔-suitable for investors
seeking a higher yielding municipal bond and are not subject to the alternative
minimum tax (AMT)
variable rate demand obligation (VRDO) - ANSWER✔✔-suitable for conservative
investors seeking income
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
