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Topics of FINRA Series 7 Certification Exam
Candidates must know the exam topics before they start of preparation. Because it will really help them in hitting the core. Our FINRA Series 7 exam dumps will include the following topics:
- Equity, and debt instruments
- Options
- Interactions with clients
- Retirement plans
- Packaged Securities
NEW QUESTION 41
Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:
- A. may be levied only if the charge if fair, reasonable, and non-discriminatory
- B. may be levied only if the security has a value of less than $5,000
- C. may not be levied under FINRA Conduct Rules
- D. may not be levied unless there is no trading in the account for more than six months
Answer: A
Explanation:
may be levied only if the charge if fair, reasonable, and non-discriminatory. This is the standard in the FINRA rules.
NEW QUESTION 42
What rate of return takes into consideration appreciation or depreciation in market value relating to the par value of a debt security?
- A. nominal yield
- B. current yield
- C. yield to maturity
- D. basis yield
Answer: C
Explanation:
yield to maturity. The premium or discount in the security price relative to par value is considered when computing the yield to maturity.
NEW QUESTION 43
A mutual fund letter of intent may permissibly be predated for a period of time up to:
- A. 90 calendar days
- B. 10 business days
- C. 13 months
- D. 5 business days
Answer: A
Explanation:
Explanation/Reference:
Explanation: 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.
NEW QUESTION 44
Which of the following sets out the details for the management board of condominiums, including the board's powers and limitations?
- A. rental agreement
- B. bylaws
- C. master deed
- D. loan agreement
Answer: B
Explanation:
bylaws. The bylaws of a condominium association provide general details about management.
NEW QUESTION 45
A dealer buys 100 shares of XYZ common, which is an actively traded stock, at 23.50. Three days later, when XYZ common is quoted at 19.50 - 19.75, he sells the 100 shares to a customer.
The basis for the dealer's markup is:
- A. 5% above cost
- B. 23 1/2
- C. 10 5/8
- D. 19 7/8
Answer: D
Explanation:
Explanation/Reference:
Explanation: 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.
NEW QUESTION 46
In which of the following is not a case where a deed to a condominium qualifies as a security?
- A. there is a time and space rental pool
- B. the seller intends to profit
- C. there is management by someone other than the owner
- D. there is a 14-day owner usage provision
Answer: D
Explanation:
Explanation/Reference:
Explanation: there is a 14-day owner usage provision. This provision is unrelated to qualification as a security.
NEW QUESTION 47
The Bubba Fund is a load mutual fund that offers a reinvestment plan.
What does this mean?
- A. income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund
- B. purchasers of fund shares must agree to make regular investments over a period of years
- C. no federal income taxes are paid on dividends and capital gain distributions from the fund
- D. holders of fund shares are permitted to regularly purchase additional shares at the bid price
Answer: A
Explanation:
Explanation/Reference:
Explanation: income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund. The new purchases are at the ask price, not the bid price.
NEW QUESTION 48
A tax-free rollover of assets between qualified retirement plans for the benefit of a specific individual is permitted so long as it is accomplished within:
- A. 90 days
- B. one year
- C. 60 days
- D. 30 days
Answer: C
Explanation:
Explanation/Reference:
Explanation: 60 days. ERISA permits 60 days for rollovers.
NEW QUESTION 49
What type of security is quoted with a bid price of 4.72 and an asking price of 4.68?
- A. US treasury bill
- B. Series H bond
- C. US treasury bond
- D. US treasury note
Answer: A
Explanation:
Explanation/Reference:
Explanation: US Treasury bill. T-bills are quoted by yield. Therefore, the bid is higher than the asking price.
A higher yield means a lower price.
NEW QUESTION 50
Which of the following statements is not true about exchange traded options?
- A. they are adjusted for cash dividends
- B. they are adjusted for stock dividends
- C. they are adjusted for stock splits
- D. they are adjusted for reverse splits
Answer: A
Explanation:
they are adjusted for cash dividends. This is the statement that is "not" true.
NEW QUESTION 51
A tax shelter specifically designed for small employers is:
- A. an IRA
- B. a subsidized deferral plan
- C. a SIMPLE
- D. a Shelter Island plan
Answer: C
Explanation:
Explanation/Reference:
Explanation: a SIMPLE. IRAs are for any individuals, not just small employers. The other choices do not exist.
NEW QUESTION 52
In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600.
If Bubba sells the stock at $45 in July, what is his resulting tax liability for that transaction?
- A. a $400 capital loss
- B. a $400 gain
- C. a $1,000 gain
- D. no liability established until the offsetting option position is closed
Answer: C
Explanation:
Explanation/Reference:
Explanation: a $1,000 gain. There is a $1,000 gain on the stock. The option is a separate capital asset.
NEW QUESTION 53
Which of the following types of investment companies pays out 90% of its net investment income to shareholders?
- A. registered
- B. regulated
- C. balanced
- D. diversified
Answer: B
Explanation:
Explanation/Reference:
Explanation: regulated. Investment companies regulated by the Internal Revenue Code Subchapter M are required to pay out a minimum of 90% of their net income annually to their shareholders.
NEW QUESTION 54
If a customer dies, the registered representative is required to:
- A. await instructions and necessary papers from the executor of the estate
- B. sell out the account
- C. cancel all open (good 'til cancelled) orders
- D. both A and B
Answer: D
Explanation:
both A and B. These describe the activities a registered representative should undertake when a customer dies.
NEW QUESTION 55
Bubba Corporation has net income of $4,200,000. It has 100,000 outstanding shares of 8% preferred stock ($100 par value) and 400,000 shares of common stock ($10 par value).
What are the earnings per share of common stock?
- A. $10.50
- B. $6.00
- C. $4.20
- D. $8.50
Answer: D
Explanation:
Explanation/Reference:
Explanation: $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.
NEW QUESTION 56
Which of the following is identified as a funded debt instrument?
- A. corporate bond
- B. US treasury bond
- C. Fannie Mae bond
- D. Series EE savings bond
Answer: A
Explanation:
Explanation/Reference:
Explanation: corporate bond. All of the other securities are issues backed by the US government, which are not considered funded debt.
NEW QUESTION 57
Which of the following has the greatest risk?
- A. a GNMA bond
- B. a Series H bond
- C. a treasury bill
- D. a guaranteed corporate bond
Answer: D
Explanation:
Explanation/Reference:
Explanation: a guaranteed corporate bond. All of the other securities are obligations of the US government, which is considered to have minimal or no risk.
NEW QUESTION 58
A mutual fund custodian is paid according to which of the following specifications when receiving deposits from a shareholder's reinvestment plan?
- A. a processing fee
- B. a commission for each share purchased
- C. a percentage of the fund's net asset value
- D. a percentage of the sales charge
Answer: A
Explanation:
Explanation/Reference:
Explanation: a processing fee. Many custodian banks charge the custodian fee to the mutual fund rather than the individual shareholder.
NEW QUESTION 59
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