May 17, 2023 Updated Series-7 Dumps Questions For FINRA Exam
Best Value Available Preparation Guide for Series-7 Exam
The exam covers a wide range of topics related to the securities industry, including equity and debt securities, investment banking, options, mutual funds, and variable annuities. There are a total of 125 multiple-choice questions on the exam, and test-takers have 3 hours and 45 minutes to complete it.
NEW QUESTION # 95
A limit order is best describes as an order:
- A. that is in effect for only one day
- B. to buy at a specific price or lower
- C. to be executed at a specific price or better
- D. to sell at a specific price or higher
Answer: C
Explanation:
Explanation/Reference:
Explanation: to be executed at a specific price or better. Choice A is only a buy limit order and choice B is only a sell limit order. Choice C is the correct definition of a "limit order".
NEW QUESTION # 96
When an index option is exercised, settlement is made by:
- A. any of the above
- B. delivery of the underlying securities
- C. cash
- D. delivery of a futures contract
Answer: C
Explanation:
Explanation/Reference:
Explanation: cash. Index options are settled by payment of cash.
NEW QUESTION # 97
A four-letter symbol assigned to an issue is characteristic of an equity security that is:
- A. trading in less than 100-share units on the American Stock Exchange
- B. listed on the NYSE
- C. admitted to unlisted trading privileges on a regional stock exchange
- D. authorized for inclusion in the NASDAQ system
Answer: D
Explanation:
Explanation/Reference:
Explanation: authorized for inclusion in the NASDAQ system. Stocks listed on an exchange have no more than three characters in their symbols.
NEW QUESTION # 98
An option that permits the holder to exercise the contract only at expiration is referred to as:
- A. American style
- B. European style
- C. Asian style
- D. Nordic style
Answer: B
Explanation:
European style. These options can only be exercised at the expiration date while American style options can be exercised at any time prior to expiration.
NEW QUESTION # 99
Bubba decides to buy equity securities. Which of the following statements is always true about what Bubba is buying?
- A. they are not secured by collateral
- B. they have a fixed maturity date
- C. they have a fixed rate of return
- D. they are readily marketable
Answer: A
Explanation:
Explanation/Reference:
Explanation: they are not secured by collateral. Equity is ownership, which has no collateral security...or any other kind of security such as a guaranteed return, maturity, or marketability.
NEW QUESTION # 100
The FINRA markup policy applies to:
- A. new issues of corporate securities
- B. mutual fund sales
- C. principal transactions in municipal bonds
- D. agency sales OTC
Answer: D
Explanation:
agency sales OTC. Markup policy applies to basically all securities other than government and municipal offerings expect where the security is offered under a current prospectus. Choices C and D are offered under a prospectus. Choice B involves municipal securities. Therefore, choice A is the only correct answer.
NEW QUESTION # 101
A mutual fund characterized by a modest sales charge and an investment in a fixed portfolio of municipal securities is a:
- A. open-end or closed-end company
- B. unit investment trust company
- C. management company
- D. face-amount certificate company
Answer: B
Explanation:
Explanation/Reference:
Explanation: unit investment trust company. This is an example of a fixed trust, which is a type of unit investment trust.
NEW QUESTION # 102
Which of the following does not appear in the official notice of sale?
- A. method and place of settlement
- B. amount of good faith check required
- C. an offering scale of serial maturates
- D. denominations and registration privileges
Answer: C
Explanation:
an offering scale of serial maturates. The scale is set by the successful bidder.
NEW QUESTION # 103
Which of the following statements is not true about exchange traded options?
- A. they are adjusted for cash dividends
- B. they are adjusted for reverse splits
- C. they are adjusted for stock dividends
- D. they are adjusted for stock splits
Answer: A
Explanation:
they are adjusted for cash dividends. This is the statement that is "not" true.
NEW QUESTION # 104
Who is responsible for verifying that limited partners meet net worth and income requirements?
- A. the general partner
- B. the registered representative
- C. the limited partners
- 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 # 105
A 5% markup policy applies to:
- A. registered secondaries
- B. primary distributions
- C. mutual funds
- D. riskless transactions
Answer: D
Explanation:
Explanation/Reference:
Explanation: riskless transactions. The markup policy applies to everything except securities sold under a prospectus, which is the case with the other choices.
NEW QUESTION # 106
Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing.
Under FINRA Conduct Rules, Bubba may:
- A. do so if he has a history of buying hot issues
- B. not do so for his own account, buy may purchase shares for his sister's account
- C. not do so under any circumstance
- D. do so if his allotment is insubstantial and not disproportionate to public orders
Answer: C
Explanation:
Explanation/Reference:
Explanation: not do so under any circumstance. New issues may not be distributed to Bubba or members of his immediate family.
NEW QUESTION # 107
In which of the following is not a case where a deed to a condominium qualifies as a security?
- A. the seller intends to profit
- B. there is a 14-day owner usage provision
- C. there is a time and space rental pool
- D. there is management by someone other than the owner
Answer: B
Explanation:
there is a 14-day owner usage provision. This provision is unrelated to qualification as a security.
NEW QUESTION # 108
Bubba maintains an individual cash account as well as a joint account with his wife, Bubbette. While Bubba is out of town on a fishing trip, Bubbette calls the brokerage firm with an order to buy 100 shares of Great Company, Inc., at the market value for Bubba individual account. It is a stock Bubba has previously informed the brokerage he wanted to buy at the "right price".
What does the brokerage do?
- A. enter the order only after receipt of written instructions to do so from Bubba
- B. execute the order as requested
- C. buy the stock in the joint account and, after verification from Bubba, journal the security to his individual account
- D. refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette
Answer: D
Explanation:
refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette. Unless Bubbette has been given written trading authorization over Bubba's account, trading orders cannot be accepted from her or any other person.
NEW QUESTION # 109
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. $6,600
- B. $5,500
- C. $6,000
- D. $12,600
Answer: A
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 # 110
Bubba owns 100 shares of XYZ at $58. He needs to limit his loss to 5 points or less and will accept a longer time for the order to be executed, to make sure the loss does not exceed 5 points.
Which of the following orders would be the best recommendation?
- A. buy stop order
- B. sell stop order
- C. sell stop-limit order
- D. sell limit order
Answer: C
Explanation:
sell stop-limit order. A sell stop-limit order specifies a price, but will not turn into a market order. This order will only get executed at the price or better. Stop orders, although quicker in execution, will turn into market orders and the customer will not be guaranteed a specific price. Stop -limit orders are risky, in that the order may or may not get executed, but in this situation, it is the best choice.
NEW QUESTION # 111
Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account.
He may do so by depositing stocks with a market value of:
- A. 4,000
- B. $2,800
- C. $5,714
- D. $9,333
Answer: D
Explanation:
Explanation/Reference:
Explanation: $9,333. If Bubba were depositing cash, he would need $2,800 (70% x $4,000). Since he is depositing stock, he would have to deposit enough with loan value of $2,800. To arrive at this, divide
$2,800 by the 30% loan value to obtain $9,333.
NEW QUESTION # 112
Which of the following registered investment companies normally sells with an appropriate commission added to the contract price?
- A. a unit investment trust
- B. a face-amount certificate company
- C. an open-end investment company
- D. a closed-end investment company
Answer: D
Explanation:
a closed-end investment company. An open-end investment company may have a sales charge but not a commission.
NEW QUESTION # 113
Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the prices listed:
100 ABC $30
200 XYZ $70
200 QBB $40
200 KKK $25
Total market value = $30,000
Debit balance in the account = $12,000
Net equity balance of the account = $18,000
If Bubba wants to buy 100 shares of DUM at $30 per share, how much additional money must be deposited?
- A. $3,000
- B. $1,500
- C. $0
- D. $2,000
Answer: C
Explanation:
$0. The cost of Bubba's purchase is $3,000 (100 x $30). But Reg T only requires 50% in Bubba's account and he has that.
NEW QUESTION # 114
Which of the following best describes depreciation?
- A. return of principal from real estate investments
- B. deductions from gross income to offset lower value of equipment
- C. a tax credit available to investors in heavy equipment
- D. capitalized and amortized maintenance costs
Answer: B
Explanation:
Explanation/Reference:
Explanation: deductions from gross income to offset lower value of equipment. The cost of equipment is deducted from gross income over the life of the equipment, as its value declines.
NEW QUESTION # 115
Which of the following is not provided for by Blue Sky laws?
- A. registration of securities dealers
- B. registration of securities offered in the state
- C. interstate mail fraud in securities offerings
- D. registration of representatives
Answer: C
Explanation:
interstate mail fraud in securities offerings. Blue Sky laws are state security laws and do not cover interstate regulations.
NEW QUESTION # 116
Bubba buys a ten-year municipal and at 102 and sells it five years later at 101.
What is tax treatment?
- A. no capital loss or income deduction is realized
- B. a $10 long-term capital loss is realized
- C. the $10 loss is applied against future profits in municipal securities
- D. the $10 loss is applied as a reduction against ordinary income
Answer: A
Explanation:
no capital loss or income deduction is realized. The $20 premium is amortized over the ten-year life of the bond. After five years, half of the premium has been written down. The remaining premium is the same as the premium received upon selling the bond. The sale at 101 results in no loss or gain.
NEW QUESTION # 117
Bubba Corporation has 3,500,000 shares of common stock outstanding and its trading volume in the few weeks has been as follows:
Week 1 - 43,000
Week 2 - 30,900
Week 3 - 37,500
Week 4 - 42,600
Week 5 - 33,000 (the most recent week)
If an affiliated person wanted to liquidate some of his holding of 100,000 shares pursuant to SEC Rule 144, how many shares could he sell?
- A. 38,500
- B. 35,000
- C. 36,000
- D. 37,400
Answer: C
Explanation:
Explanation/Reference:
Explanation: 36,000. Under Rule 144 up to one percent of the outstanding shares or the average weekly volume for the preceding four weeks, whichever is greater. The total volume for the last four seeks was
144,000 shares. The average is therefore 36,000 shares. This is greater than one percent of the shares outstanding (35,000).
NEW QUESTION # 118
The gross spread in a new issue depends upon which of the following?
- A. all of the above
- B. the type of industry in which the issuer is engaged
- C. the amount of the issue
- D. the past record of the issuing corporation
Answer: A
Explanation:
Explanation/Reference:
Explanation: all of the above. The gross spread (or "underwriting spread") depends upon all of these factors.
NEW QUESTION # 119
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