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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 241:

  In the distribution of a new issue underwriters or selling group member are prohibited from:

  A. selling to the public at the so-called public offering price
  B. selling to another broker or dealer who needs to fill an accommodation order
  C. withholding blocks of a new issue in the member's account
  D. all of the above
  C. withholding blocks of a new issue in the member's account

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  Explanation/Reference:

  withholding blocks of a new issue in the member's account. Underwriters and selling group members are prohibited from keeping blocks of a new issue for their own accounts.

• Question 242:

  Assuming all of the following bonds from the same issuer are callable now, which one would most likely get called first?

  A. 8% maturing 1-15-2016
  B. 8% maturing 1-15-2007
  C. 4% maturing 1-15-2012
  D. 4% maturing 1-15-2007
  A. 8% maturing 1-15-2016

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  Explanation/Reference:

  8% maturing 1-15-2016. Bonds with the highest coupon rates would be the first to most likely get called. The issuer will look to issue new debt at a lower rate. Since there are two 8% bonds, the one that would most likely get called are those with the longest maturity.

• Question 243:

  The most common type of bond issued by a well-established company is:

  A. a debenture
  B. a senior secured note
  C. a convertible
  D. an open-end mortgage
  A. a debenture

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  Explanation/Reference:

  a debenture. Because of the company's well-established financial condition, it issues a debenture that has no specific collateral and is only backed by the creditworthiness of the issuer.

• Question 244:

  Who is responsible for verifying that limited partners meet net worth and income requirements?

  A. the limited partners
  B. the general partner
  C. the sponsor
  D. the registered representative
  D. the registered representative

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  Explanation/Reference:

  the registered representative. Assuring that limited partners meet net wroth and income requirements is the responsibility of the registered representative.

• Question 245:

  Bubba buys a municipal bond at 102 and holds it ten years to maturity. For tax purposes, how is that premium treated?

  A. recorded as a long-term capital loss
  B. an ordinary loss taken as a deduction from taxable income
  C. amortized over the life of the bond resulting in no loss at maturity
  D. carried forward as a premium loss applied against profits realized on future municipal securities
  C. amortized over the life of the bond resulting in no loss at maturity

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  Explanation/Reference:

  amortized over the life of the bond resulting in no loss at maturity. For tax purposes, premiums are amortized over the life of the bond. Some amount is taken each year.

• Question 246:

  When pricing callable municipal bonds, the "price to call" is based upon which of the following?

  A. in-whole calls
  B. partial calls
  C. sinking fund calls
  D. catastrophe calls
  A. in-whole calls

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  Explanation/Reference:

  in-whole calls. Price to call computations are based upon in-whole calls only. These calls will result in all bondholders being called simultaneously, thus guaranteeing a minimum yield to all.

• Question 247:

  Which of the following is not true about brokerage accounts?

  A. in a community property state, a married woman must open a brokerage account with her husband
  B. stock purchased in a custodian account may not be purchased on margin or held in bearer form
  C. numbered accounts are permissible provided there is a record kept on file at the brokerage firm attesting to the actual ownership
  D. if a fiduciary intends to buy stocks in a margin account the trust agreement authorizing the margin transactions must be kept on file at the brokerage firm
  A. in a community property state, a married woman must open a brokerage account with her husband

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  Explanation/Reference:

  in a community property state a married woman must open a brokerage account with her husband. All of the other choices are true. Only choice A is "not" true.

• Question 248:

  How much currency is one mil worth?

  A. one-tenth of one cent
  B. one-tenth of $1
  C. one-tenth of $100
  D. one-tenth of $1,000
  B. one-tenth of $1

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  Explanation/Reference:

  one-tenth of one cent. A point equals $10 and a basis point equals ten cents.

• Question 249:

  Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the prices listed: 100 ABC $30 200 XYZ $70 200 QBB $40 200 KKK $25 Total market value = $30,000 Debit balance in the account = $12,000 Net equity balance of the account = $18,000

  If Bubba wants to buy 100 shares of DUM at $30 per share, how much additional money must be deposited?

  A. $3,000
  B. $1,500
  C. $2,000
  D. $0
  D. $0

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  Explanation/Reference:

  $0. The cost of Bubba's purchase is $3,000 (100 x $30). But Reg T only requires 50% in Bubba's account and he has that.

• Question 250:

  For an FINRA member firm to exercise discretionary power in any customer account requires written authorization by that customer except when:

  A. the customer is a spouse of the registered representative
  B. the customer has given an oral approval after the transaction
  C. only time and price of execution are involved
  D. both B and C
  C. only time and price of execution are involved

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  Explanation/Reference:

  only time and price of execution are involved. The only exception to the discretionary rule is when the customer gives discretion regarding time and price of execution.