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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 151:

  Bubba Corporation issued bonds that pay interest on January 15 and July 15 each year until maturity. An investor purchasing these bonds on Monday, April 12, must pay the contract price plus accrued interest for: A. 87 days

  B. 89 days
  C. 93 days
  D. 90 days
  D. 90 days

  ---

  Explanation/Reference:

  90 days. Interest accrues from the coupon date to the settlement date. A regular way purchase on April 12 will settle on April 15. corporate bonds are figures on 30-day months, regardless of the actual number of days in the month. The year is considered 360 days. Therefore, interest is calculated for 16 days in January plus 30 each for February and March plus 14 for April.

• Question 152:

  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

  What is the buying power in Bubba's account?

  A. $3,000
  B. $6,000
  C. $11,000
  D. $0
  B. $6,000

  ---

  Explanation/Reference:

  $6,000. Divide Bubba's excess equity by the Reg T margin requirement of 50%.

• Question 153:

  The principal underwriter of an open-end investment company is frequently called:

  A. participating investment advisor
  B. sponsor
  C. selling group member
  D. investment counselor
  B. sponsor

  ---

  Explanation/Reference:

  sponsor. Also called the "distributor", these terms are interchangeable for an open -end investment company.

• Question 154:

  Which of the following is not an investment company within the terms of the Investment Company Act of 1940?

  A. a holding company dealing in mineral leaseholds
  B. a face-amount certificate company
  C. a unit investment trust company
  D. a management company
  A. a holding company dealing in mineral leaseholds

  ---

  Explanation/Reference:

  a holding company dealing in mineral leaseholds. The other choices are the three classifications of investment companies under the 1940 act.

• Question 155:

  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?

  A. short combination
  B. long combination
  C. long straddle
  D. short straddle
  D. short straddle

  ---

  Explanation/Reference:

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

• Question 156:

  A syndicate manager has just been informed that its bid has been accepted and all syndicate members are duly notified. Public information on the award will be most quickly available from:

  A. the Blue List
  B. the daily Bond Buyer
  C. the Wall Street Journal
  D. Munifacts
  D. Munifacts

  ---

  Explanation/Reference:

  Munifacts. This is a wire service provided by the daily Bond Buyer. It displays information on municipal traders, underwriters, and other participants in the fixed income markets.

• Question 157:

  Bubba buys municipal bonds with a $100,000 principal amount at 89 on margin. His account has no cash or securities. What is his minimum required deposit?

  A. $5,080
  B. $13,350
  C. $22,500
  D. $50,000
  B. $13,350

  ---

  Explanation/Reference:

  $13,350. Munis are not subject to Reg T. The NYSE maintenance requirement on munis is the greater% of the market value or 7% of the principal amount.

• Question 158:

  Under a leaseback arrangement used to finance construction of local schools, who is the issuer of the municipal bonds?

  A. the state in which the schools are located
  B. the local school district
  C. a legal authority created for this purpose
  D. a public housing authority commissioned by the federal government
  C. a legal authority created for this purpose

  ---

  Explanation/Reference:

  a legal authority created for this purpose. Bonds with a leaseback arrangement are issued by a specially created entity.

• Question 159:

  In the distribution of a new issue, a dealer acting as an underwriter is said to have a:

  A. firm market
  B. divided account
  C. free ride
  D. firm commitment
  D. firm commitment

  ---

  Explanation/Reference:

  firm commitment. The term underwriting means a guarantee to the issuing corporation. This is a firm commitment, unlike a best efforts offering where there is no guarantee.

• Question 160:

  Initial margin deposit minimum requirements are set by the:

  A. NYSE
  B. FINRA
  C. FRB
  D. FDIC
  C. FRB

  ---

  Explanation/Reference:

  FRB. The Federal Reserve Board sets the initial margin deposit requirements. The NYSE set the ongoing minimum equity requirements.