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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 211:

  The expiration date of a listed option is:

  A. the last day of the expiration month
  B. the third Saturday of the expiration month
  C. the Saturday following the third Friday of the expiration month
  D. the third Friday of the expiration month
  C. the Saturday following the third Friday of the expiration month

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  Explanation/Reference:

  the Saturday following the third Friday of the expiration month. It is NOT the third Saturday. The final day to trade options is the third Friday of the expiration month. The options expire the next da y.

• Question 212:

  Level III of NASDAQ provides which of the following?

  A. representative quotations
  B. firm quotations
  C. subject markets
  D. workout markets
  B. firm quotations

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  Explanation/Reference:

  firm quotations. All Level III quotations are firm.

• Question 213:

  Bubba owns 200 shares of XYZ at $90, and wishes to hedge the position while generating income. What is the best recommendation?

  A. sell calls
  B. sell puts
  C. buy calls
  D. buy puts
  A. sell calls

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  Explanation/Reference:

  sell calls. Calls are covered by the underlying stock. If the calls were exercised, the stock would be delivered to meet the obligation. The income also reduces the break-even of the stock.

• Question 214:

  In which of the following situations may exemption from compliance with Regulation T be granted?

  A. a broker/dealer who does not offer margin accounts
  B. a broker/dealer conducts business only in registered securities
  C. a broker/dealer transacting less than 10% of its business through a member of a securities exchange
  D. none of the above
  D. none of the above

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  Explanation/Reference:

  none of the above. No broker/dealer is exempt. Reg T covers cash accounts as well as margin accounts.

• Question 215:

  Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital. How many rights does Bubba receive?

  A. 20
  B. 50
  C. 100
  D. 200
  D. 200

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  Explanation/Reference:

  200. In an issue of rights, there is always one right per share. Bubba owns 200 shares and thus receives the same number of rights.

• Question 216:

  Regulation A permits a short form of filing for offerings of new securities provided the total amount of the offering does not exceed:

  A. $1,000,000
  B. $5,000,000
  C. $2,000,000
  D. $2,500,000
  B. $5,000,000

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  Explanation/Reference:

  $5,000,000. This is the maximum under Regulation A.

• Question 217:

  Which of the following is not prohibited of a general partner?

  A. acting in such a way as to impede the orderly business of the partnership
  B. buying or selling assets of the partnership except to foster the business of the partnership
  C. competing in any way with the partnership
  D. accepting compensation from any other partnership
  D. accepting compensation from any other partnership

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  Explanation/Reference:

  accepting compensation from any other partnership. A general partner may be the partner is more than one partnership.

• Question 218:

  A mutual fund letter of intent may permissibly be predated for a period of time up to: A. 5 business days

  B. 10 business days
  C. 90 calendar days
  D. 13 months
  C. 90 calendar days

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  Explanation/Reference:

  90 calendar days. An investor has 90 days from the date of original purchase to sign a letter of intent. The maximum duration for the letter is 13 months from the initial purchase.

• Question 219:

  Bubba buys a municipal bond at a discount and holds it to maturity. Which of the following is true?

  A. interest is taxable as ordinary income
  B. the capital gain is tax exempt
  C. interest is tax exempt, but the capital gain is taxable
  D. the capital gain is tax exempt, but the interest is taxable as ordinary income
  C. interest is tax exempt, but the capital gain is taxable

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  Explanation/Reference:

  interest is tax exempt, but the capital gain is taxable. This happens because Bubba purchased the bond in the secondary market with a different price than the original issue face amount.

• Question 220:

  Bubba buys an OTC stock from a firm that is a market -maker in the stock. What may be said about the price he pays?

  A. it does not include a markup
  B. it includes a markup
  C. it includes a commission and a markup
  D. it includes a special fee
  B. it includes a markup

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  Explanation/Reference:

  it includes a markup. A market-maker acts as principal. Therefore, Bubba pays a markup but not a commission.