Series7 Questions Pass on Your First Attempt Dumps for FINRA Certification Certified
Series7 Practice Test Pdf Exam Material
NEW QUESTION 182
Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If
market conditions change, Smart Guys may:
- A. not change the bid unless first notifying the other dealer
- B. change the bid only with prior approval of the other dealer
- C. change the bid
- D. not change the bid
Answer: C
Explanation:
change the bid. A workable bid indicates a price level where a dealer is willing to negotiate
business. It is not a firm bid and may be changed before becoming firm.
NEW QUESTION 183
Assuming that the information contained in a registration statement is complete and accurate, the
registration statement becomes effective:
- A. 30 days after receipt by the SEC
- B. 20 days after receipt by the SEC
- C. 10 days after receipt by the SEC
- D. only after the SEC specifically clears the issue in writing to the principal underwriter
Answer: D
Explanation:
only after the SEC specifically clears the issue in writing to the principal underwriter. The
registration statement becomes effective when notice is received in writing from the SEC.
NEW QUESTION 184
Bubba held one XYZ July 30 listed call option when XYZ split 2 for 1. What is the resulting position Bubba
has on the Option Clearing Corporation's record?
- A. long one XYZ July 30 call and short one XYZ July 30 call
- B. long two XYZ July 30 calls
- C. long two XYZ July 15 calls
- D. long one XYZ July 30 call
Answer: C
Explanation:
long two XYZ July 15 calls. Double the number of contracts and half the strike price. This is
similar to XYZ shareholders doubling the number of shares they hold at the lower price.
NEW QUESTION 185
A registered bond with "Happy Birthday" scrawled across the face of the certificate is delivered to a
broker/dealer in satisfaction of sale by another member firm. Assuming it is accompanied by an authentic
assignment, power of substitution form, and tax stamps (if appropriate), this is good delivery only if:
- A. the certificate is validated by the registered owner
- B. the marking did not cover the name of the registered owner or the principal amount of the bond
- C. the certificate is validated by the transfer agent
- D. this is not a good delivery under any circumstances
Answer: C
Explanation:
the certificate is validated by the transfer agent. A mutilated bond must be validated before it
can be a good delivery. The validation can be made by the issuer or the transfer agent.
NEW QUESTION 186
In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35
strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses
his stock for delivery. What is his resulting tax consequence?
- A. cannot be determined without knowing the market price of XYZ upon exercise
- B. neither profit nor loss
- C. this is a wash sale and cannot be included in the investor's tax calculations
- D. a $600 capital loss
Answer: D
Explanation:
a $600 loss. The strike price and Bubba's purchase price are the same. He has a $600 loss
on the option for the premium he paid.
NEW QUESTION 187
Limited partnerships try to avoid recapture because:
- A. it may subject the partnership to the add-on tax
- B. it increases the risk of a tax audit
- C. it turns potential capital gains into current taxable income
- D. it always increases the investor's tax bracket
Answer: C
Explanation:
it turns potential capital gains into current taxable income. Recapture is taxed as ordinary
income, not capital gain. The other choices are not true.
NEW QUESTION 188
Level III of NASDAQ provides which of the following?
- A. subject markets
- B. firm quotations
- C. workout markets
- D. representative quotations
Answer: B
Explanation:
firm quotations. All Level III quotations are firm.
NEW QUESTION 189
Which of the following are direct obligations of the US government?
- A. Farm Credit System bonds
- B. both B and C
- C. Series EE bonds
- D. Import-Export bank bonds
Answer: C
Explanation:
Series EE bonds. Import-Export bank bonds and Farm Credit System bonds are not direct
obligations of the United States.
NEW QUESTION 190
Which of the following is not true about mutual funds and variable annuities?
- A. the holder of each must pay income taxes on the dividends received each year
- B. each is regulated under the Investment Company Act of 1940
- C. the payout of each depends on the investment results of the securities owned in the portfolio
- D. the registered representative must have FINRA registration to solicit either one
Answer: A
Explanation:
the holder of each must pay income taxes on the dividends received each year. Only the
holder of mutual fund shares must pay income tax on annual dividends. This is "not" true of annuity
owners. The other choices are true statements.
NEW QUESTION 191
The FINRA markup policy requires that over-the-counter transactions with a customer be at:
- A. prices reasonably related to the dealer's cost
- B. prices reasonably related to the current market price of the security
- C. a markup based on previous activity in the customer's account
- D. a markup not to exceed 5% of the current offering price
Answer: B
Explanation:
prices reasonably related to the current market price of the security. All markups must be
based upon the current market rather than the dealer's cost.
NEW QUESTION 192
An issuer is most likely to request an investment letter from the purchaser in connection with which of the
offerings?
- A. a private placement
- B. an exempt security
- C. a hot issue
- D. a mutual fund
Answer: A
Explanation:
a private placement. Normally, private placements are conducted with an investment letter.
NEW QUESTION 193
Although a corporation has no earnings in a particular year, it is obligated to pay interest on all its
outstanding debt except the following:
- A. equipment trust certificates
- B. convertible subordinated debentures
- C. collateral trust bonds
- D. adjustment bonds
Answer: D
Explanation:
adjustment bonds. These bonds are also known as income bonds. Interest is paid only if
there is income.
NEW QUESTION 194
A withdrawal from a Roth IRA may be a qualified distribution if the Roth IRA has been open for at least:
- A. 90 days
- B. 5 years
- C. 2 years
- D. one year
Answer: B
Explanation:
five years. The five-year holding period begins on the first day of the year for which
contributions were made.
NEW QUESTION 195
If a customer dies, the registered representative is required to:
- A. sell out the account
- B. both A and B
- C. await instructions and necessary papers from the executor of the estate
- D. cancel all open (good 'til cancelled) orders
Answer: B
Explanation:
both A and B. These describe the activities a registered representative should undertake
when a customer dies.
NEW QUESTION 196
Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the
prices listed
1 00 ABC $30
2 00 XYZ $70
2 00 QBB $40
2 00 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
What is the buying power in Bubba's account?
- A. $6,000
- B. $3,000
- C. $11,000
- D. $0
Answer: A
Explanation:
$6,000. Divide Bubba's excess equity by the Reg T margin requirement of 50%.
NEW QUESTION 197
Who is responsible for verifying that limited partners meet net worth and income requirements?
- A. the limited partners
- B. the registered representative
- C. the general partner
- D. the sponsor
Answer: B
Explanation:
the registered representative. Assuring that limited partners meet net wroth and income
requirements is the responsibility of the registered representative.
NEW QUESTION 198
Which of the following is an analyst most likely to classify as a defensive issue?
- A. a stock of a large company
- B. the common stock of a utility company
- C. the securities of a company that airplanes to the military
- D. a corporate bond
Answer: B
Explanation:
the common stock of a utility company. The term "defensive issue" refers to a security that is
least susceptible to swings in the business cycle.
NEW QUESTION 199
If recaptured deductions are added to income, recaptured investment tax credits are added to:
- A. taxes
- B. basis
- C. income
- D. gains
Answer: A
Explanation:
taxes. Tax credits are not deductible expenses and have no effect on basis.
NEW QUESTION 200
Which of the following is least relevant in evaluating the safety of a general obligation bond?
- A. total debt service as a percentage of net operating revenue
- B. total GO debt as a percentage of assessed value of property
- C. total GO debt as a percentage of market value of property
- D. per capital debt
Answer: A
Explanation:
total debt service as a percentage of net operating revenue. This ratio is applicable to
revenue bonds but not general obligation bonds. The other choices are all used in measuring credit risk in
a GO bond.
NEW QUESTION 201
Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and
SMA of $500. What is the NYSE minimum equity maintenance for this account?
- A. $6,000
- B. $6,600
- C. $5,500
- D. $12,600
Answer: B
Explanation:
$6,600. The NYSE maintenance requirement on short margin accounts is 30%. Multiplying
the short market value of $22,000 by 30% equals $6,600.
NEW QUESTION 202
Provisions of SEC Rule 145 normally apply to an exchange of one security for another as a result of:
- A. a change in par value
- B. a merger
- C. a "no-sale" ruling issued by the SEC
- D. a stock split
Answer: B
Explanation:
a merger. Rule 145 basically applies to mergers, consolidations, and acquisitions.
NEW QUESTION 203
What is the loan value on a call option held in a customer's margin account?
- A. 30%
- B. the compliment of the FRB initial margin requirement for listed stocks
- C. 0
- D. 50%
Answer: C
Explanation:
0. Options do not have loan value, except for long-term LEAPS.
NEW QUESTION 204
Under what circumstances may a municipal securities dealer guarantee a customer against loss in market
value of bonds?
- A. only if the bonds are rated AAA or Aaa
- B. only if the agreement is in writing
- C. under no circumstances
- D. only if the bonds are insured
Answer: C
Explanation:
under no circumstances. No guarantees may be made against loss of market value because
no one can guarantee the direction of the market. Insured bonds are protected against loss of principal
and interest but not against market value depreciation.
NEW QUESTION 205
Which of the following best describes phantom income?
- A. income reported but not received
- B. income from deductions and tax credits
- C. the non-taxable portion of a distribution
- D. income received but not reported
Answer: A
Explanation:
income reported but not received. Reportable income that is not distributable includes loan
forgiveness.
NEW QUESTION 206
......
Series7 [Oct-2022] Newly Released] Exam Questions For You To Pass: https://www.dumpstests.com/Series7-latest-test-dumps.html