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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 171:

  The Bubba Insurance Company is not incorporated. It consists of Bubba and his two brothers as general partners, who maintain an active securities account in the name of the company. If one of the partners should suddenly die, what course of actions should be undertaken by the registered representative at the brokerage?

  A. freeze the account from further activity until a death certificate and new partnership agreement are furnished to the brokerage
  B. no special action is required because the death of a single partner does not terminate the partnership agreement
  C. distribute the assets in the account to the surviving partners
  D. execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage
  D. execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage

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  Explanation/Reference:

  execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage. Sell orders may be accepted but not buy orders or distributions.

• Question 172:

  Bubba Brokerage Corporation announces through its wire system that it has a large block of stock for sale. Customers purchasing the stock will not pay a commission. The block is crossed on the NYSE floor and is printed on the NYSE tape. This is called a:

  A. special order
  B. exchange distribution
  C. secondary distribution
  D. specialist block purchase
  B. exchange distribution

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  Explanation/Reference:

  exchange distribution. An exchange distribution is a large block sold internally by one firm that is crossed on the floor of the exchange. The trade would print on the tape identified by the letters "DIST".

• Question 173:

  If a customer dies, the registered representative is required to:

  A. cancel all open (good `til cancelled) orders
  B. await instructions and necessary papers from the executor of the estate
  C. sell out the account
  D. both A and B
  D. both A and B

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  Explanation/Reference:

  both A and B. These describe the activities a registered representative should undertake when a customer dies.

• Question 174:

  A treasury obligation having no fixed rate of interest with a thirty-day maturity due April 22 is most likely a:

  A. treasury note
  B. tax anticipation bill
  C. Series H bond
  D. Series EE bond
  B. tax anticipation bill

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  Explanation/Reference:

  tax anticipation bill. These obligations pay no interest and their maturity comes after corporate tax payment dates. They are accepted for redemption at face value prior to maturity on corporate tax payment dates to encourage purchase by corporations.

• Question 175:

  On which of the following is depreciation permitted?

  A. rental property whose value is declining
  B. residential property not used for business
  C. property whose maintenance exceeds the investment credit
  D. equipment subject to recapture
  B. residential property not used for business

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  Explanation/Reference:

  residential property not used for business. Depreciation is only permitted on income-producing property.

• Question 176:

  Which of the following is an analyst most likely to classify as a defensive issue?

  A. the securities of a company that airplanes to the military
  B. a stock of a large company
  C. the common stock of a utility company
  D. a corporate bond
  C. the common stock of a utility company

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  Explanation/Reference:

  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.

• Question 177:

  Upon opening a new account for a customer, a registered representative should:

  A. inquire about age
  B. investigate the customer's credit rating
  C. determine what is suitable for the customer based upon his financial background
  D. all of the above
  D. all of the above

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  Explanation/Reference:

  all of the above. These are required I Rule 405 of the NYSE and under suitability requirements in the Rules of Fair Practice of the FINRA.

• Question 178:

  A bank or trust company that is acting as custodian for a mutual fund does which of the following?

  A. guarantees investor losses on investments
  B. provides investment advice to the fund's managers
  C. redeem and issues fund shares
  D. physically protects the fund's assets
  D. physically protects the fund's assets

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  Explanation/Reference:

  physically protects the fund's assets. The custodian holds the assets of the fund. The transfer agent redeems and issues fund shares.

• Question 179:

  Which of the following options positions is characteristic of a short straddle?

  A. long one put and short one call
  B. long one call and short one put
  C. long one put and short one call
  D. long one call and long one put
  C. long one put and short one call

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  Explanation/Reference:

  long one put and short one call. This is a short straddle. A position that is long one put and long one call is a long straddle.

• Question 180:

  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?

  A. Anti-Trust Division of the Justice Department
  B. SEC
  C. Federal Reserve Board
  D. FINRA
  D. FINRA

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  Explanation/Reference:

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