FINRA FINRA-SERIES-7 Online Practice Questions and Exam Preparation

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 111:

  Big Easy Investment Banking, Inc., participates in a Western account underwriting of $10 million of municipal bonds by agreeing to underwrite 10% of the issue. One week later, $4 million remains unsold but Big Easy has distributed $1.5

  million of bonds.

  What is the liability of Big Easy remaining in the account?

  A. $0
  B. $400,000
  C. $600,000
  D. $1,000,000
  D. $1,000,000

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  Explanation/Reference:

  $1,000,000. In a Western account, each underwriter has divided liability and each is responsibility only for his respective part. In this case, Big Easy is responsible for 10% of $10,000,000 - or $1,000,000.

• Question 112:

  How much money is a concession of 3/8 worth for one municipal bond?

  A. $0.375
  B. $3.75
  C. $37.50
  D. $375.00
  B. $3.75

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  Explanation/Reference:

  $3.75. Three-eighths of a $1,000 bond with a par price of 100.00 equals $3.75.

• Question 113:

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

  A. Interpositioning
  B. Churning
  C. Crossing
  D. Money laundering
  D. Money laundering

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  Explanation/Reference:

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

• Question 114:

  Bubba buys one XYZ October 80 put and sells one XYZ October 70 put. What is his position called?

  A. calendar spread
  B. money spread
  C. straddle
  D. combination
  B. money spread

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  Explanation/Reference:

  money spread. Since the strike prices are different, but not the expiration date, this is a money spread (sometimes called a "price spread" or a "vertical spread").

• Question 115:

  Bubba is buying a treasury bill. The discount he receives results in Bubba's determination of:

  A. face value
  B. nominal yield
  C. rate of return
  D. yield to call
  C. rate of return

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  Explanation/Reference:

  rate of return. Because T-bills pay no interest, Bubba's rate of return is the discount as a percentage of the face value he receives at maturity.

• Question 116:

  Which of the following does not affect the public offering price of a new issue?

  A. anticipated earnings of the issuer in the next year
  B. dividend projections for the next year
  C. the book value of the issuer
  D. the selling group's determination of value in the prevailing market conditions
  D. the selling group's determination of value in the prevailing market conditions

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  Explanation/Reference:

  the selling group's determination of value in the prevailing market conditions. The offering price is determined by factors related to the issuer.

• Question 117:

  Which of the following is considered an intangible asset?

  A. marketable securities
  B. trademarks
  C. accounts receivable
  D. furniture
  B. trademarks

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  Explanation/Reference:

  trademarks. Intangible assets are those whose true value cannot be determined, but there is some supposed market value.

• Question 118:

  A group net order is one that benefits municipal syndicate members:

  A. equally
  B. according to their percentage participation in the account
  C. according to the number of designated orders they've received
  D. according to the number of presale orders they've received
  B. according to their percentage participation in the account

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  Explanation/Reference:

  according to their percentage participation in the account. For example, if the group net order produces $3,000 in fees and a syndicate member has a 10% overall participation, that member receives $300 in fees.

• Question 119:

  Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

  A. if it is accompanied by a red herring
  B. if he has permission of his employer
  C. if his firm is not the managing underwriter
  D. under no circumstances
  D. under no circumstances

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  Explanation/Reference:

  under no circumstances. The representative may send the red herring but not a research report of his firm.

• Question 120:

  Which of the following has the greatest risk?

  A. a guaranteed corporate bond
  B. a GNMA bond
  C. a Series H bond
  D. a treasury bill
  A. a guaranteed corporate bond

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  Explanation/Reference:

  a guaranteed corporate bond. All of the other securities are obligations of the US government, which is considered to have minimal or no risk.