FINRA FINRA Certifications FINRA-SERIES-7 Questions & Answers

• Question 181:

  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. $5,500

  B. $6,000

  C. $6,600

  D. $12,600

  Correct Answer: C

  $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.

• Question 182:

  A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked. What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?''

  A. $98,062.50

  B. $98,187.50

  C. $98,250.00

  D. $98,750.00

  Correct Answer: A

  $98,062.50. The financial institution receives the bid price, which is 98 and 2 / 32. Two thirty-seconds is $0.625. The 98 is the percentage of a $1,000 bond. Multiplying 98% by $1,000 results in $980. Add $0.625 to $980 to arrive at $980.625 per bond. But ...there are 100 bonds. So, multiplying $980.625 by 100 equals $98,062.50.

• Question 183:

  Commercial paper is typically issued with a maturity date not exceeding:

  A. 90 days

  B. 6 months

  C. 270 days

  D. 1 year

  Correct Answer: C

  270 days. A characteristic of commercial paper is relatively short duration, normally not exceeding 270 days.

• Question 184:

  A mutual fund characterized by a modest sales charge and an investment in a fixed portfolio of municipal securities is a:

  A. face-amount certificate company

  B. unit investment trust company

  C. management company

  D. open-end or closed-end company

  Correct Answer: B

  unit investment trust company. This is an example of a fixed trust, which is a type of unit investment trust.

• Question 185:

  How often must Investment companies issue financial statements to shareholders?

  A. monthly

  B. quarterly

  C. semi-annually

  D. annually

  Correct Answer: C

  semi-annually. Investment companies are required to issue financial report semi-annually. Many do so more frequently.

• Question 186:

  A registered representative is given a limited trading authorization by a client. This permits the representative to:

  A. withdraw money from the account

  B. enter orders for the account at the representative's discretion

  C. withdraw securities from the account

  D. all of the above

  Correct Answer: B

  enter orders for the account at the representative's discretion. A limited trading authorization only allows for entering of orders. A full trading authorization would also permit withdrawals from the account.

• Question 187:

  Which of the following is not an intangible drilling cost?

  A. salaries

  B. supplies and fuel

  C. machinery and pipe

  D. repairs

  Correct Answer: C

  machinery and pipe. These are tangible fixed assets and not associated with intangible drilling costs.

• Question 188:

  In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?

  A. the premiums will be approximately the same

  B. the LEAPS premium will be higher than the traditional option premium

  C. the premium for the traditional option will be higher than the LEAPS option premium

  D. LEAPS premiums do not consider time value

  Correct Answer: B

  the LEAPS premium will be higher than the traditional option premium. Because LEAPS have a longer time until expiration than traditional options, the premium should be higher.

• Question 189:

  In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4. What is the price for XYZ stock at which Bubba will breakeven?

  A. $94

  B. $87

  C. $86

  D. $79

  Correct Answer: D

  $79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).

• Question 190:

  An advertisement for a CMO security by a member of FINRA should disclose which of the following?

  A. the exact yield investor will earn

  B. the yield based upon the prevailing discount rate

  C. that the stated yield is an estimate that may vary passed upon prepayments and market factors

  D. that the yield may be greater than the stated percentage but never less

  Correct Answer: C

  that the stated yield is an estimate that may vary passed upon prepayments and market factors. The only guarantee is that nothing is guaranteed, especially the yield.