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

FINRA FINRA-SERIES-7 Online Questions & Answers

• Question 361:

  A four-letter symbol assigned to an issue is characteristic of an equity security that is:

  A. authorized for inclusion in the NASDAQ system
  B. listed on the NYSE
  C. admitted to unlisted trading privileges on a regional stock exchange
  D. trading in less than 100-share units on the American Stock Exchange
  A. authorized for inclusion in the NASDAQ system

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  Explanation/Reference:

  authorized for inclusion in the NASDAQ system. Stocks listed on an exchange have no more than three characters in their symbols.

• Question 362:

  Which of the following sets of prices is that of a closed-end investment company?

  A. $7.50 $8.10
  B. $10.10 $11.00
  C. $28.14 $27.75
  D. $20.15 $21.85
  C. $28.14 $27.75

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  Explanation/Reference:

  NAV=$28.14 and Asked Price=$27.75. In this case the ask price is less than NAV, which is never true of an open-end investment company.

• Question 363:

  As a general rule, when a partnership is terminated, in what order are assets distributed?

  A. general creditors, secured lenders, limited partners, general partners
  B. secured lenders, limited partners, general creditors, general partners
  C. secured lenders, general creditors, limited partners, general partners
  D. general creditors, general partners, limited partners, secured lenders
  C. secured lenders, general creditors, limited partners, general partners

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  Explanation/Reference:

  secured lenders, general creditors, limited partners, general partners. Creditors first, in order of their security, then partners. General partners are last.

• Question 364:

  A registered representative just accepted Bubba's instructions to buy a specific stock in the over-the-counter market with the credit balance in his account. Which of these orders for that issue can be entered and executed on a single ticket in a typical broker/dealer organization?

  A. buy 150 XYZ at market
  B. buy 150 XYZ at 17.50 or better
  C. buy $2,500 worth of a mutual fund XYZ Corporation
  D. all of these
  D. all of these

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  Explanation/Reference:

  all of these. In the OTC market, all of these orders are possible. A mutual fund is considered OTC.

• Question 365:

  If the Federal Reserve wished to ease credit, which of the following steps would it take?

  A. raise the discount rate
  B. purchase securities in the open market
  C. lower reserve requirements
  D. both B and C
  D. both B and C

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  Explanation/Reference:

  both B and C. Buying in the open market injects funds into the economy. Lowering reserve requirements provides banks with more funds for lending.

• Question 366:

  The public offering price of the securities of an open-end management investment company is:

  A. determined by a method set forth in the prospectus of the issuer
  B. based upon net asset value of the securities underlying the shares of the issuer plus a 10 % sales charge
  C. determined by the relative demand for the shares of the issuer
  D. the price used by distributors in determining sales incentive discounts to individual purchasers
  A. determined by a method set forth in the prospectus of the issuer

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  Explanation/Reference:

  determined by a method set forth in the prospectus of the issuer. The method is described in the prospectus. It uses the net asset value plus any sales charge

• Question 367:

  The preferred stock of Greatest Technology Corporation has a $100 par and is convertible into four shares of common stock. The preferred is trading at 104.50. The preferred is callable at 101. If the common stock price is presently 27.89, which of the following actions would be a successful arbitrage:

  A. purchase 400 shares of common stock and sell 100 shares of preferred stock as "short exempt" (that is, the sale is exempt from the uptick rule)
  B. purchase the preferred stock and sell an appropriate amount of the common stock "short exempt"
  C. purchase both the common and the preferred stocks as a hedge against further market risk
  D. purchase the preferred stock and let it be called, which is inevitable at these market prices
  B. purchase the preferred stock and sell an appropriate amount of the common stock "short exempt"

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  Explanation/Reference:

  purchase the preferred stock and sell an appropriate amount of the common stock "short exempt". Arbitrage is the nearly simultaneous purchase and sale of equal securities in different markets for a profit. Selling four shares of common stock for every one share of preferred stock purchased provides a profit. The transactions involve the same number of common shares because the preferred is convertible to common at a four to one ratio.

• Question 368:

  Which of the following are sources of funding for limited partnerships?

  A. proceeds of the offering
  B. periodic assessments on the partners
  C. installment payments
  D. all of the above
  D. all of the above

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  Explanation/Reference:

  all of the above. All are sources of funds for limited partnerships along with non -recourse loans.

• Question 369:

  After an extended period of backing and filling, a stock moves up sharply through a resistance level on heavy volume. A technical analyst would likely call this a:

  A. buy-in
  B. technical rally
  C. buying climax
  D. breakout
  D. breakout

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  Explanation/Reference:

  breakout. An upward move through a resistance level that is confirmed by heavy volume is called a breakout.

• Question 370:

  Which of the following pays interest at maturity only?

  A. a corporate serial bond
  B. US treasury bills
  C. Income bonds
  D. Series H savings bonds
  B. US treasury bills

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  Explanation/Reference:

  US treasury bills. T-bills are purchased at a discount and do not have interest coupons. When surrendered, the par value is paid at maturity. All the other choices, if they are paying any interest, pay throughout the term of the issue.