FINRA-SERIES-7 Online Practice Questions and Answers

Which of the following does not issue debt securities that trade in the open market?

A. Fannie Mae

B. Freddie Mac

C. Federal Reserve Banks

D. Federal Land Banks

Which of the following options positions is characteristic of a short straddle?

A. long one put and short one call

B. long one call and short one put

C. long one put and short one call

D. long one call and long one put

A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so. What type of bond is this?

A. limited tax

B. double-barreled

C. Series 8

D. moral obligation

Assuming that the information contained in a registration statement is complete and accurate, the registration statement becomes effective:

A. 10 days after receipt by the SEC

B. 20 days after receipt by the SEC

C. 30 days after receipt by the SEC

D. only after the SEC specifically clears the issue in writing to the principal underwriter

Convertible bonds have all of the following features except:

A. an ability to protect a short position on the stock into which they are convertible

B. permissibility for use as collateral

C. a normally higher yield than non-convertible bonds of the same issuer

D. fluctuations influenced by changes in the price of the underlying common stock

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 Bubba wants to buy 100 shares of DUM at $30 per share and 100 shares of OUT at $120.

How much additional money must be deposited?

A. $6,000

B. $7,000

C. $4,500

D. $1,500

Which of the following statements regarding mutual funds is true?

A. the custodian can also be the transfer agent

B. the sponsor receives a management fee based on the fund's total assets

C. the terms "management company" and "investment advisor" are interchangeable

D. the management company receives a portion of the sales load for managing the fund assets

Bubba is opening a margin account with a member organization. He wishes to purchase 100 shares of XYZ at $15 per share. What is Bubba's initial cash deposit?

A. $375

B. $1,050

C. $1,500

D. $2,000

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

What is the importance of the "at risk" rule?

A. it limits deductions to the amount at risk

B. it limits liability to the amount at risk

C. deductions for interest may not exceed investment income

D. it prevents carry forward of disallowed interest deductions