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FINRA-SERIES-7 Real Exam Questions

FINRA General Securities Representative Qualification (GS)

400 questions available · Page 1 of 40

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Question 1 Single choice

Which securities do not receive dividends?

  1. A

    ADRs

  2. B

    warrants

  3. C

    common stock

  4. D

    preferred stock

Show answer and explanation

Correct answer: B

Explanation

warrants. All of the other choices receive dividends if they are declared. But only warrants are a specific security that never pays dividends.

Question 2 Single choice

Bubba owns a perpetual warrant to buy one share of Internet Corporation common stock at $30. Internet Corporation stock is trading at 41.50 and is ex-dividend today at $0.75.

What is the market value of Bubba's warrant?

  1. A

    5.75

  2. B

    5.62

  3. C

    5.38

  4. D

    cannot be determined from this information

Show answer and explanation

Correct answer: D

Explanation

cannot be determined. Bubba can put away the calculator. The warrant is "perpetual" so the value is not determinable from today's price of the common stock.

Question 3 Single choice

Bubba has not existing positions in his account and writes 1 XYZ July 60 put and 1 XYZ July 60 call.

What is this position called?

  1. A

    short combination

  2. B

    long combination

  3. C

    long straddle

  4. D

    short straddle

Show answer and explanation

Correct answer: D

Explanation

short straddle. A straddle is a put and call on the same stock with the same strike price and expiration date.

Question 4 Single choice

Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?

  1. A

    Interpositioning

  2. B

    Churning

  3. C

    Crossing

  4. D

    Money laundering

Show answer and explanation

Correct answer: D

Explanation

money laundering. Potential money laundering activities include excessive wiring of money between accounts.

Question 5 Single choice

For a self-employed individual's retirement plan, ERISA permits an investment in which of the following?

  1. A

    a unit investment trust

  2. B

    a variable annuity

  3. C

    a US Treasury bond

  4. D

    all of the above

Show answer and explanation

Correct answer: D

Explanation

all of the above. Each of these investments qualify for a retirement plan or an IRA.

Question 6 Single choice

Which of the following is least relevant in evaluating the safety of a general obligation bond?

  1. A

    per capital debt

  2. B

    total GO debt as a percentage of market value of property

  3. C

    total GO debt as a percentage of assessed value of property

  4. D

    total debt service as a percentage of net operating revenue

Show answer and explanation

Correct answer: D

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.

Question 7 Single choice

Who obtains and pays the municipal bond attorney rendering a legal opinion about the validity of the bond issue?

  1. A

    the purchaser of the bonds

  2. B

    the underwriter

  3. C

    the issuing municipality

  4. D

    the municipality's financial adviser

Show answer and explanation

Correct answer: C

Explanation

the issuing municipality. The issuer pays for the attorney.

Question 8 Single choice

All sales literature and advertising relating to investment company shares prepared by members of FINRA must be filed for review with which of the following?

  1. A

    Anti-Trust Division of the Justice Department

  2. B

    SEC

  3. C

    Federal Reserve Board

  4. D

    FINRA

Show answer and explanation

Correct answer: D

Explanation

FINRA. Sales literature regarding investment company shares must be filed with FINRA within three days after the first use.

Question 9 Single choice

Which of the following are direct obligations of the US government?

  1. A

    Import-Export bank bonds

  2. B

    Series EE bonds

  3. C

    Farm Credit System bonds

  4. D

    both B and C

Show answer and explanation

Correct answer: B

Explanation

Series EE bonds. Import-Export bank bonds and Farm Credit System bonds are not direct obligations of the United States.

Question 10 Single choice

The gross spread in a new issue depends upon which of the following?

  1. A

    the amount of the issue

  2. B

    the type of industry in which the issuer is engaged

  3. C

    the past record of the issuing corporation

  4. D

    all of the above

Show answer and explanation

Correct answer: D

Explanation

all of the above. The gross spread (or "underwriting spread") depends upon all of these factors.