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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 221:

  Bubba buys a 5% municipal bond maturing in 15 years that is trading at a market price of 85. What is the current yield?

  A. 5.00%
  B. 5.88%
  C. 6.49%
  D. 5.10%
  B. 5.88%

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  Explanation/Reference:

  5.88%. The current yield is the annual interest divided by the price. The bond will pay $50 of interest per year ($1,000 face amount times 5%). Dividing by the price of $850 equals 5.88%.

• Question 222:

  If a municipality has funds available to make a partial call of an issue of outstanding serial bonds, which bonds should be called first?

  A. the shortest maturity
  B. the maturity with the largest number of bonds
  C. the longest maturity
  D. the maturity bearing the lowest interest rate
  C. the longest maturity

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  Explanation/Reference:

  the longest maturity. These bonds are called first because the municipality will save the interest costs for the longest period of time.

• Question 223:

  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
  D. all of the above are required

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  Explanation/Reference:

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

• Question 224:

  Which of the following is not true about US treasury bills?

  A. they are issued at a discount
  B. they are money market instruments
  C. they are issued in denominations of $1,000 to $1,000,000
  D. they are general obligations of the US government
  C. they are issued in denominations of $1,000 to $1,000,000

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  Explanation/Reference:

  they are issued in denominations of $1,000 to $1,000,000. Remember, the question asks what is "not" true. The smallest denomination for a US treasury bill is $10,000.

• Question 225:

  What is the possible reward for investing in raw land?

  A. deferred income
  B. large deductions
  C. potential capital appreciation
  D. lack of investment risk
  C. potential capital appreciation

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  Explanation/Reference:

  potential capital appreciation. This is the only correct choice. Any income is not deferred, raw land cannot be depreciation for a large deduction, and there is substantial risk.

• Question 226:

  Feasibility studies and engineering surveys are most necessary prior to which of the following new offerings?

  A. general obligation bonds
  B. limited tax bonds
  C. revenue bonds
  D. corporate debentures
  C. revenue bonds

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  Explanation/Reference:

  revenue bonds. The security for a revenue bond depends on the revenue produced by the specific facility. Engineering estimates of constructions costs and potential traffic flow are critical.

• Question 227:

  A typical money market instrument carries which of the following?

  A. serial bond maturity date
  B. long-term maturity date
  C. medium-term maturity date
  D. short-term maturity date
  D. short-term maturity date

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  Explanation/Reference:

  short-term maturity. A money market maintains liquidity and is defined as having maturity of less than one year.

• Question 228:

  Which of the following pairs of corporation characteristics are easiest for a partnership to avoid?

  A. business objective and centralized management
  B. continuity of life of the business and limited liability
  C. two or more associates and free transferability of assets
  D. continuity of life of the business and transferability of assets
  D. continuity of life of the business and transferability of assets

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  Explanation/Reference:

  continuity of life of the business and transferability of assets. Partnerships may seek to avoid continuance of the business life and asset transfer. The other choices are too important for partnerships to sacrifice.

• Question 229:

  Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:

  A. not change the bid
  B. not change the bid unless first notifying the other dealer
  C. change the bid only with prior approval of the other dealer
  D. change the bid
  D. change the bid

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  Explanation/Reference:

  change the bid. A workable bid indicates a price level where a dealer is willing to negotiate business. It is not a firm bid and may be changed before becoming firm.

• Question 230:

  For what time period does a Form 144 remain in effect?

  A. 30 days
  B. 60 days
  C. 90 days
  D. one year
  C. 90 days

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  Explanation/Reference:

  90 days. To avoid a forced sale, stock many be sold under Rule 144 over a 90-day period.