Free FINRA-SERIES-7 Exam Dumps Preview

rate of return. Because T-bills pay no interest, Bubba's rate of return is the discount as a percentage of the face value he receives at maturity.

a broker/dealer firm. A broker/dealer cannot use Rule 144 when selling stock.

$8.50. Subtract the preferred dividend of $800,000 (100,000 x 8% x 100) from the net income. Divide the result of $3,400,000 ($4,200,000 - $800,000) by the 400,000 common shares to obtain $8.50.

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

the value of the annuitant's contract before annuity payments begin. Accumulation units determine contract value.
Payout are determined by annuity units.

70½ This the age at which IRA withdrawals are required.

premium. The price of closed-end investment companies is determined by trading of their shares in the open market. The price may be a discount to net asset value or a "premium" above net asset value.

transfer of ownership of a limited partnership interest. Transfer of ownership does "not" result in automatic termination.

$98,062.50. The financial institution receives the bid price, which is 98 and 2 / 32. Two thirty-seconds is $0.625. The 98 is the percentage of a $1,000 bond. Multiplying 98% by $1,000 results in $980. Add $0.625 to $980 to arrive at $980.625 per bond. But ...there are 100 bonds. So, multiplying $980.625 by 100 equals $98,062.50.

the price at which the issue is offered. The offering price is usually determined on the offering date and does not normally appear in the preliminary prospectus.

the current market for the stock. FINRA rules require the markup to be based upon the current market price.

when the underlying stock price is rising. That's why the holder of this option wants to have a right to "call" the stock.

taxes. Tax credits are not deductible expenses and have no effect on basis.

the holders of common stock and the holders of preferred stock. The holders of all classes of stock are the owners. Each stock class has separate privileges, but all represent ownership. Even if the government is an owner, it holds shares of stock.

$20,000. The equity in a short margin account is equal to the credit balance minus the short market value.
SMA is not considered when computing equity.

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.

a copy of the underwriting agreement. The underwriting agreement is "not" in the final prospectus. This is a contract between the issuer and the underwriting syndicate.

a guaranteed corporate bond. All of the other securities are obligations of the US government, which is considered to have minimal or no risk.

the company files regular financial data with the SEC. Rule 144 transactions may use either agency or principal methods.

regulated. The term "regulated" refers to tax status under Subchapter M of the Internal Revenue Code.
This simply means that if a mutual fund or other investment company qualifies for regulated status, the threat of taxation at multiple levels is eliminated.

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

the specific bid and offering terms of the issue. The bid and offering terms are determined after the syndicate letter to underwriters.

adjustment bonds. These bonds are also known as income bonds. Interest is paid only if there is income.

warrants. All of the other choices receive dividends if they are declared. But only warrants are a specific security that never pays dividends.

sponsor. Also called the "distributor", these terms are interchangeable for an open -end investment company.

$9,000. Credit balances in short accounts do not change because of fluctuation in market prices. The initial deposit of $3,000 ($6,000 x 50%) plus the $6,000 from the short sale leave a credit balance of $9,000.

0. Options do not have loan value, except for long-term LEAPS.

deductions from gross income to offset lower value of equipment. The cost of equipment is deducted from gross income over the life of the equipment, as its value declines.

90 days. Interest accrues from the coupon date to the settlement date. A regular way purchase on April 12 will settle on April 15. corporate bonds are figures on 30-day months, regardless of the actual number of days in the month. The year is considered 360 days. Therefore, interest is calculated for 16 days in January plus 30 each for February and March plus 14 for April.

a normally higher yield than non-convertible bonds of the same issuer. Remember that the question says
"except" for this feature. Convertible bonds normally do NOT have a higher yield than non-convertible bonds of the same issuer. Convertibles usually have a lower yield than non -convertible sisters.

no later than the fifth business day after the trades. Bubba should pay up no later than the fifth business day.

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.

$400,000. In an Eastern account, liability remains open until the entire syndication is closed. Therefore, Big Easy has a liability for 10% of the unsold portion. Since the unsold portion is $6 million, the liability for Big Easy is 10% of that amount, which is $400,000.

the certificate is validated by the transfer agent. A mutilated bond must be validated before it can be a good delivery. The validation can be made by the issuer or the transfer agent.

equally to all CMO holders of any tranche. All bondholders share equally in the interest payments. Only principal payments are directed to the owners in each tranche in sequential order.

it is somewhat below the standard minimum. The standard minimum current ratio for a manufacturing company is 2 to 1. The current ratio for this company is 1.92 (9,400,000 divided by 4,900,000).

owned by the members of the syndicate. In a firm commitment the underwriter buys the securities from the issuing company. If they don't sell to the public, they are owned by the underwriters.

trademarks. Intangible assets are those whose true value cannot be determined, but there is some supposed market value.

an open-end investment company. By definition, open-end funds may not issue senior securities. They
only issue "voting stock".

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.

both A and B. These describe the activities a registered representative should undertake when a customer dies.

the custodian may perform an essential clerical service for the fund and its shareholders. The custodian holds the cash and securities of the investment company and performs the bookkeeping functions. It does not have a supervisory role.

physically protects the fund's assets. The custodian holds the assets of the fund. The transfer agent redeems and issues fund shares.

borrowing at 6% and investing the funds at 10%. Leverage is all about using money obtained at a lower cost than what can be earned deploying the funds elsewhere. It is unrelated to arbitrage.

premium. That's the term for the option cost.

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

best efforts. A best efforts deal least likely for a municipal securities offering. It is most often associated with small corporate stock or limited partnership offerings. Municipal securities are usually competitive bid or negotiated. Both of these types are firm commitment.

$500. Bubba sold short at $58. The call with a strike price of 60, gives him the right to buy back the stock at $60. If the stock rises, the call can be used to limit the loss to 2 points. Bubba can lose $200 on the stock.
Bubba also paid a $300 premium. Loss potential is $500.

lending the fund's securities to banks or broker/dealers. This practice is not permitted under federal law.

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

a fundamental analyst. These analysts are guided by computations about a company's performance using data in annual reports.

the underwriting spread is greater than the selling concession. The underwriting spread (or "gross spread") is the difference between the price paid to the issuer and the public offering price. The selling concession is the amount that the managing underwriter gives to dealers in the selling group. The reallowance is the amount that underwriters give to other dealers and is less than the selling concession.

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.

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.

27.50. Anytime there is qualifying language attached to a quotation it is not considered firm.

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

19 7/8. The markup is always based on the current market price, not upon cost. Therefore, the markup is based on the offering side of the current quotation.

a processing fee. Many custodian banks charge the custodian fee to the mutual fund rather than the individual shareholder.

$1,000. This is the minimum denomination. Normally, US treasury bonds are in much larger denominations.

$6,000. Divide Bubba's excess equity by the Reg T margin requirement of 50%.