FINRA FINRA Certifications FINRA-SERIES-7 Questions & Answers

• Question 11:

  An offering price of 102 plus accrued interest applies to which of the following securities?

  A. treasury bills

  B. certificates of deposit

  C. commercial paper

  D. banker's acceptances

  Correct Answer: B

  certificates of deposit. CDs trade with "accrued interest" as part of the price.

• Question 12:

  Bubba has several accounts at a brokerage firm. Which of the following is not covered by SIPC?

  A. individual account in Bubba's name only

  B. commodities account in Bubba's name only

  C. joint account of Bubba and his wife

  D. joint account of Bubba and his son, Bubba, Jr.

  Correct Answer: B

  commodities account in Bubba's name only. SIPC does not cover commodities accounts.

• Question 13:

  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

  Correct Answer: D

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

• Question 14:

  Which of the following must be true in order for an offering to qualify as an intrastate offering under Rule 147?

  A. 80% of the proceeds of the offering must be used in that state

  B. 80% of the corporation's assets must be located in that state

  C. 80% of the corporation's revenue must be earned in that state

  D. all of the above are required

  Correct Answer: D

  all of the above are required. An intrastate offering under Rule 147 requires qualification under all of these conditions.

• Question 15:

  Which of the following would be least useful to an analyst making a technical market report?

  A. advances and declines

  B. new highs and lows

  C. the short interest

  D. predictions of recession in the economy

  Correct Answer: D

  predictions of recession in the economy. All of the other choices are technical market indicators. An economic forecast is "fundamental" market data.

• Question 16:

  Bubba Corporation owes income tax. Which of the following may be tendered at par value for payment of the tax?

  A. term bond

  B. tax anticipation bill

  C. special tax bond

  D. pre-issue bond

  Correct Answer: B

  tax anticipation bill. These are specifically designated securities that may be used at face value for payment of corporate taxes.

• Question 17:

  Bubba buys a US treasury bond. The interest he earns is:

  A. subject to federal and state income tax

  B. exempt from federal and state income tax

  C. subject to state income tax but exempt from federal income tax

  D. subject to federal income tax but exempt from state income tax

  Correct Answer: D

  subject to federal income tax but exempt from state income tax. The interest on US government securities is taxed by the US government but not by state governments. The opposite is true of bonds issued by a state, which are exempt from federal tax but subject to state taxes -except for taxes of the state that issues them.

• Question 18:

  Which of the following oil and gas programs does not directly involve drilling?

  A. exploratory

  B. developmental

  C. balanced

  D. income

  Correct Answer: D

  income. With an income program, the well is already producing. The risk is associated with the commodity price.

• Question 19:

  A registered representative privately assures a customer that a certain stock will double within 18 months. During this period the stock the stock performs as predicted. Which of the following statements is true?

  A. the commentary was permissible because the stock advanced as the registered representative forecast

  B. this is a violation because the SEC requires all information about stock prices to be publicly announced

  C. this statement constituted a form of fraud prohibited under the Securities Exchange Act of 1934

  D. the comment is permissible only if the representative had been registered with the SEC under the Investment Advisors Act of 1940

  Correct Answer: C

  this statement constituted a form of fraud prohibited under the Securities Exchange Act of 1934. Such statements are fraudulent when rendered even if future events result in their accuracy.

• Question 20:

  In order to determine the amount of estate tax due, if any, the assets of a decedent's estate are valued as of the date of death. A second evaluation is then made:

  A. three months after the date of death

  B. six months after the date of death

  C. one year after the date of death

  D. at any time up to six months after the date of death

  Correct Answer: B

  six months after the date of death. A second evaluation is made six months from the date of death. The estate may then use either value in determining estate tax.