Series 7 Exam 2024 2025 For Dummies Book + 6 Practice Tests Online 6th Edition Steven M. Rice - Solutions

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At what time must an individual begin withdrawals from a Roth IRA?(A) At age 59½(B) At age 73(C) On April 1st of the year after turning 73(D) None of the above
A mutual fund that invests only in securities within a specific industry is called a(A) Balanced fund(B) Growth fund(C) Hedge fund(D) Sector fund
What is the maximum contribution for a 56-year-old investor into a traditional IRA each year?(A) $45,000(B) $6,000(C) $6,500(D) $7,500
Which of the following is true about advertising for a municipal fund security?I. It must be approved by a principal of the firm selling the securities.II. It must not be fraudulent.III. It must first be approved by the MSRB.IV. It must be approved by the state administrator in each state in which
Which of the following is characteristic of commercial paper?(A) It is quoted as a percent of par.(B) It is proof of ownership of the corporation.(C) It is issued to raise capital for a corporation.(D) It is junior to convertible preferred stock.
Which of the following ratios does not measure the liquidity of a company?(A) Current ratio(B) Quick ratio(C) Ratio of cash and securities to current liabilities(D) Debt to equity ratio
Changes in which of the following nonfinancial information might change an investor’s investment objectives?I. The investor growing older II. Getting married or divorced III. Investment experience IV. Family responsibilities(A) II and IV(B) I, II, and III(C) I, II, and IV(D) I, II, III, and IV
An investor purchased 1,000 shares of WXY at$40. If WXY announces a 5 for 4 split, what is the investor’s position after the split?(A) 1,250 WXY at $32(B) 1,250 WXY at $50(C) 800 WXY at $32(D) 800 WXY at $50
What is the maximum potential loss for an investor who sells a call option?(A) The strike price × 100 shares(B) The strike price × 100 shares, less the premium(C) The strike price × 100 shares, plus the premium(D) Unlimited
One of your wealthier clients is interested in purchasing a fund. If liquidity is high on their list of investment objectives, which of the following would be the least suitable recommendation?(A) ETFs(B) Inverse ETFs(C) Hedge funds(D) Money market funds CHAPTER 19 Practice Exam 2 429
Which of the following are true about closed-end funds?I. They may only issue common stock.II. They are generally listed on an exchange.III. They have a fixed number of shares outstanding.IV. They are redeemable.(A) II and III(B) I and IV(C) I, III, and IV(D) II, III, and IV
What is the primary objective for an individual who invests in undeveloped land?(A) Depletion deductions(B) Depreciation deductions(C) Appreciation potential(D) Tax-deferred income
All of the following are true regarding limited partners EXCEPT(A) They have access to unlimited financial information regarding the partnership.(B) They may participate in management decisions because limited partners have a tremendous amount of risk.(C) They may vote to terminate a
An investor purchases 1 TUV Sep 30 call for a premium of 4. This option will expire(A) on the third Saturday in September(B) on the third Friday in September(C) on the Saturday following the third Friday in September(D) on a date to be assigned by the CBOE
ABC stock pays an annual dividend of $4, has an earnings per share of $8, and a market price of $40. What is ABC’s PE ratio?(A) 2(B) 5(C) 10(D) 20
Income derived from an investment in a real-estate limited partnership is termed(A) earned income(B) passive income(C) portfolio income(D) capital gains
Which of the following are money market securities?(A) Commercial paper(B) Treasury bonds(C) American depositary receipts (ADRs)(D) Warrants
All the following calculations can be determined by finding the information on a corporation’s balance sheet EXCEPT(A) working capital(B) net worth(C) current yield(D) quick assets
A customer wants their registered representative to purchase a security that is incompatible with their investment objectives. What action should the registered representative take under FINRA rules?(A) Enter the order and note that it was unsolicited.(B) Enter the order only if the customer puts
Which of the following option positions provides an investor with potential premium income while limiting the maximum loss potential?(A) Debit spread(B) Credit spread(C) Long straddle or long combination(D) Short straddle or short combination
All of the following are included on a confirmation for non-callable municipal bonds that were purchased on a yield basis EXCEPT(A) the purchase price(B) the par value(C) the yield to maturity(D) the taxable equivalent yield
If a corporation pays a cash dividend, how does it affect its balance sheet?I. Assets decrease II. Liabilities decrease III. Net worth decreases IV. Net worth remains the same(A) I and III(B) II and III(C) I, II, and III(D) I, II, and IV
Which of the following municipal bonds is backed by lease payments made by an underlying facility?(A) IDR(B) LTGO(C) LRB(D) BAB
A quote of 1.20 bid 1.18 offered is most likely a quote on which of the following:(A) A T-bond(B) A T-bill(C) A general obligation (GO) bond(D) A Fannie Mae (FNMA) bond
Which of the following need approval from a brokerage firm’s principal?I. New accounts II. Recommendations III. Handling of complaints IV. Trades in all accounts(A) I and II(B) I, III, and IV(C) II, III, and IV(D) I, II, III, and IV
A TUV Oct 60 call is trading for 9 when TUV is at $65. What is the time value of this option?(A) 0(B) 4(C) 5(D) 9
All of the following are types of blue-sky registration EXCEPT(A) registration by cooperation(B) registration by coordination(C) registration by qualification(D) registration by filing
Which of the following sequences reflects the priority of payments made when a limited partnership is liquidated?I. Secured creditors II. General creditors III. Limited partners IV. General partners(A) I, II, III, IV(B) IV, II, III, I(C) IV, II, I, III(D) I, IV, II, III
Which of the following best describes the tax status of a limited partnership?(A) The partnership is fully taxed.(B) All tax liability flows through to the limited partners.(C) Any income generated is taxed as ordinary income.(D) Any gains generated are taxed as capital gains.
Sam Smith sends an email to his registered rep, John Johnson, complaining about the amount of commission he was charged on his last trade.According to FINRA rules, what should John Johnson do with the complaint?(A) Ignore it because the complaint needs to be in writing(B) Print it out and give it
The Order Audit Trail System tracks the(A) execution of an order only(B) cancellation of an order only(C) entire life of an order from entry to execution(D) None of the above
AylDec Corporation common stock is currently trading in the market for $22 per share. AylDec Corp. pays an annual dividend of $0.60 per share and has an earnings per share (EPS) of $4.What is the PE ratio?(A) 4.50(B) 5(C) 5.50(D) Cannot be determined
Which of the following statements regarding municipal bonds with call provisions is TRUE?(A) Bonds are likely to be called when interest rates fall.(B) Call provisions favor investors.(C) Bonds are likely to be called when interest rates rise.(D) Call provisions are not advantageous to issuers.
One of the advantages of portfolio margin is that it allows(A) smaller investors the opportunity to purchase securities on margin(B) less sophisticated investors a chance to purchase securities on margin(C) investors to avoid maintenance calls(D) investors greater leverage
Which of the following is TRUE regarding standard equity options?I. Each standard contract represents 1,000 shares of the underlying security II. Each standard contract represents 100 shares of the underlying security III. They are exercisable European style IV. They are exercisable American
Use the following exhibit to answer this question:Balance Sheet of ABCD Corp. Assets Liabilities Cash $300,000 Accounts payable$300,000 Accounts receivable$1,500,000 Taxes payable$250,000 Inventory $1,200,000 Bonds maturing this year$800,000 Goodwill $2,000,000 Bonds maturing in 5 years$2,000,000
Regarding margin accounts, which two of the following are TRUE?I. Minimum maintenance on a long account is 25 percent.II. Minimum maintenance on a short account is 25 percent.III. Minimum maintenance on a long account is 30 percent.IV. Minimum maintenance on a short account is 30 percent.(A) I and
Luke Landworker holds 10 XYX May 30 calls.XYX increases to $40, and he exercises the calls.Luke tells his registered rep to sell the stock immediately after purchase. If these trades are executed in a margin account, how much does Luke have to deposit?(A) $3,000(B) $30,000(C) $35,000(D) No deposit
An investor is holding 1 ABC Oct 35 call option.Which of the following option positions, if purchased by this customer, would create a long straddle?(A) Short 1 ABC Nov 35 call option(B) Short 1 ABC Oct 30 call option(C) Long 1 ABC Oct 40 call option(D) Long 1 ABC Oct 35 put option
These municipal notes provide interim financing for a municipality that’s waiting for a grant from the U.S. government.(A) BANs(B) TRANs(C) GANs(D) CLNs
An investor opens a margin account by purchasing 1,000 shares of ABC at $15 per share and shorting 1,000 shares of DEF at $12 per share. What is the investor’s margin call as a result of these transactions?(A) $1,500(B) $3,000(C) $13,500(D) $27,000
If your customer, William Goate, purchases shares in a municipal bond fund, which of the following statements is TRUE?(A) Dividends are subject to alternative minimum tax.(B) Dividends are taxable to all investors.(C) Capital gains distributions are taxable.(D) Capital gains distributions are not
Which of the following is the issuer and guarantor of all listed options?(A) The OCC(B) The OAA(C) The ODD(D) The CBOE
Sal Gold is new to investing and wants to purchase a security that will provide him with current income with minimal risk. Which of the following are you LEAST likely to recommend?(A) An income fund(B) Treasury bonds(C) An international fund(D) AA rated municipal bonds
What is the maximum loss on a debit spread?(A) The difference between the premium paid and the premium received(B) The difference between the two strike prices multiplied by 100, less the premium paid, plus the premium received(C) The difference between the two strike prices multiplied by 100, less
Your client, Dana Griffin, is about to retire and she wants predictable income. Which of the following would NOT be a good investment for Dana?I. AA rated IDB II. U.S. Treasury note III. AA rated debenture IV. Income bonds(A) II only(B) I and III(C) II and IV(D) IV only
Which of the following bonds would most likely have the highest coupon rate?(A) DEF Corp. mortgage bonds(B) DEF Corp. collateral trusts(C) DEF Corp. debentures(D) DEF Corp. equipment trusts
A Designated Market Maker is responsible for doing all of the following EXCEPT(A) maintaining a fair and orderly market(B) competing with public orders to keep trading as active as possible(C) trading for their own account(D) trading for customer accounts
The trading volume for some large institutional orders is concealed from the public. What is this called?(A) Fourth market trades(B) Dark pools of liquidity(C) Third-market trades(D) A violation
Brett Overtrade is a registered representative who works for Missed Again Securities. Brett has just learned of the death of one of his customers. Which of the following actions should Brett take regarding his deceased customer’s account?I. Mark his customer’s account as deceased.II. Cancel all
The largest source of backing for a local GO bond is(A) property tax(B) sales tax(C) income tax(D) traffic fines and parking tickets
An investor purchased 200 shares of AYLA Corp.common stock for a price of $5,000 on October 1st. The following October 1st, the investor sold the 200 shares of AYLA Corp. common stock for$6,000. The $1,000 capital gain will be I. considered short-term II. considered long-term III. taxed at a
Ginny Goldtrain is a wealthy investor who is in the highest income bracket. Ginny is looking for an investment that would limit her tax liability and put her on equal footing with investors in lower income-tax brackets. Which of the following securities would you MOST likely recommend?(A)
Barbara Billington has a margin account with a market value of $30,000 and a debit balance of$12,000. If Barbara wants to purchase an additional $10,000 of stock in this account, what amount must she deposit?(A) $2,000(B) $3,000(C) $5,000(D) $10,000
One of your clients purchased a 4 percent ABC convertible bond yielding 5 percent and convertible at $50. If your client holds the bond until maturity, how much will they receive?(A) $1,000(B) $1,020(C) $1,025(D) $1,050
Which of the following is TRUE of a durable power of attorney?(A) It would be automatically revoked in the event that the grantor is declared incompetent.(B) It gives power of attorney to someone else in the event that an individual becomes incompetent.(C) It gives power of attorney to someone else
All of the following are nonfinancial influences that may help determine an investor’s investment profile EXCEPT(A) the investor’s age(B) the amount of marketable securities the investor owns(C) the number of dependents(D) investment experience
An investor who purchases a variable life insurance policy faces which of the following risks?(A) The insurance company may have to increase the premium if the securities held in the separate account underperform the market.(B) The insurance company may decrease the premium if the securities held
IRAs may be set up in all the following ways EXCEPT(A) single life(B) life with period certain(C) joint and last survivor(D) uniform lifetime
All of the following impact the marketing of a municipal bond issue EXCEPT(A) the rating(B) the interest(C) the date of maturity(D) the dated date
Which of the following DOES NOT describe Treasury stock?(A) It has no voting rights.(B) It is stock that was previously authorized but is still unissued.(C) It is issued stock that has been repurchased by the company.(D) It does not receive dividends.
Mr. Smith has an inactive account with stocks and bonds at a broker-dealer. How often is the firm required to send Mr. Smith an account statement?(A) Once a month(B) Once a week(C) Once every three months(D) Once every six months
Which of the following features of a corporation would be examined by a fundamental analyst?(A) Earnings trends(B) Support and resistance(C) Breadth of the market(D) None of the above
Use the following exhibit to answer this question:TUV Strike May Aug. Nov.60.50 50 12 14.50 16 60.50 50p a 0.50 1.25 60.50 60 2 3.25 5 60.50 60p 1.50 2.75 4(p – put, a – not traded)If an investor buys a TUV Nov 60 put and writes a TUV Nov 50 put, what is the maximum gain?(A) $275(B) $325(C)
Broker-dealers may charge a I. commission II. markup III. markdown(A) I only(B) I and II(C) II and III(D) I, II, and III
A saucer formation is an indication that a security is(A) consolidating(B) breaking out(C) reversing from a bullish trend(D) reversing from a bearish trend
The first time a company ever issues securities is called a(n)(A) IPO(B) first market trade(C) rights offering(D) None of the above
For investors interested in purchasing CMOs, which of the following tranches is considered the safest?(A) Planned amortization class(B) Targeted amortization class(C) Companion(D) Z
Which of the following funds changes its balance to hold more fixed-income securities and less equity securities as the years pass?(A) A balanced fund(B) A hedge fund(C) A life-cycle fund(D) A growth fund
One of your customers is interested in investing in an oil and gas limited partnership. As their registered rep, which of the following steps are you required to take?I. Prescreen the customer.II. Determine the economic soundness of the program.III. Explain the risks of investing in limited
Under the Securities Act of 1933, which of the following securities are exempt from registration and disclosure provisions?(A) Railroad equipment trust certificate(B) Municipal bonds(C) Commercial paper maturing in 270 days or less(D) All of the above
An investor purchases 300 shares of DUD Corp.at $45 per share and purchases 3 DUD Oct 40 puts at 6. What is the customer’s break-even point?(A) 39(B) 45(C) 46(D) 51
Which of the following is/are true of a REIT?I. It must invest at least 75 percent of its assets in real-estate-related activities.II. It must be organized as a trust.III. It must distribute at least 90 percent of its net investment income.IV. It must pass along losses to shareholders.(A) I, II,
Marty Martinez wants to create a short combination using his existing option. If Marty is short 1 DEF Aug 60 call, which of the following option positions should Marty purchase or sell?(A) Long 1 DEF Aug 70 put(B) Long 1 DEF Aug 60 put(C) Short 1 DEF Aug 50 put(D) Short 1 DEF Aug 60 put
All the following securities may pay a dividend EXCEPT(A) warrants(B) common stock(C) American depositary receipts (ADRs)(D) participating preferred stock
Which of the following items can be found in the certificate of limited partnership?I. The goals of the partnership and how long it’s expected to last II. The authority of the general partner to charge a fee for making management decisions for the partnership III. How the profits are to be
The indenture of a corporate bond includes all of the following EXCEPT(A) the coupon rate(B) the credit rating(C) the name of the trustee(D) the maturity date
In an initial margin transaction, an investor purchases 100 shares of WXY at $24 per share.What is the margin call?(A) $1,200(B) $1,800(C) $2,000(D) $2,400
All the following securities are typically sold short EXCEPT(A) over-the-counter common stock(B) preferred stock(C) exchange listed stock(D) municipal bonds
Which TWO of the following are TRUE regarding immediate-or-cancel orders?I. They must be executed immediately.II. They allow for partial execution.III. They must be executed in one attempt immediately.IV. They may be executed in several attempts.(A) I and III(B) II and IV(C) II and III(D) III and IV
While cold calling, a registered rep convinces a customer to purchase 100 shares of MKR for cash. On the date of that first transaction, the signature(s) of which of the following is/are required?I. The registered representative II. The customer III. The principal IV. The guarantor(A) IV only(B) I
On a competitive bid for a new municipal underwriting, the difference between the syndicate bid and the reoffering price is the(A) discount price(B) offering price(C) spread(D) bid price
If the FDA increases pollution standards that are more costly for oil companies, investors who own shares of oil company stock would most likely see the value of their shares decline due to(A) purchasing power risk(B) reinvestment risk(C) credit risk(D) regulatory risk
A mutual fund has an NAV of $9.60 and a POP of $10. What is the sales charge of this fund?(A) 2 percent(B) 3 percent(C) 4 percent(D) 5 percent
Prior to opening a day trading account for a customer, a member shall make a reasonable effort to determine certain information about the customer, including(A) their investment objectives(B) their marital status(C) their trading experience(D) All of the above
All the following information is required on a preliminary prospectus EXCEPT(A) the final offering price(B) the purpose for which the issuer is raising the funds(C) a statement in red lettering stating that items on the preliminary prospectus are subject to change before the final prospectus is
All the following activities are a registrar’s functions EXCEPT(A) accounting for the number of shares outstanding(B) auditing the transfer agent(C) ensuring that the outstanding shares do not exceed the number of shares on the corporation’s books(D) transferring shares into the name of the new
An investor wants to invest in a direct participation program (DPP) with a minimal amount of risk. Which of the following are you LEAST likely to recommend?(A) A real-estate partnership that invests in raw land(B) An oil and gas developmental program(C) An oil and gas income program(D) An equipment
Charges for services performed by a brokerdealer (such as collection of money due for principal, interest, or dividends; transfer or exchange of securities; safekeeping of securities; and so on) should be(A) considered part of the broker-dealer’s business and not charged(B) charged at a maximum
Larry Eagle is a resident of Michigan. Mr. Eagle purchased a Michigan municipal bond. What is the tax treatment of the interest that Larry earns on his Michigan bond?I. It is exempt from local taxes.II. It is exempt from state taxes.III. It is exempt from federal taxes.(A) III only(B) I and III(C)
AylDec Corporation has declared a $0.40 dividend payable to shareholders of record on Thursday, September 14. What would happen to the opening price of AylDec on Wednesday, September 13?(A) It would be reduced by the amount of the dividend.(B) It would remain the same.(C) It would be increased by
As a client’s investment objectives change, a registered rep should keep track of those changes so that they can rebalance the client’s portfolio and make proper recommendations.Which of the following changes may affect a customer’s investment objectives?I. Growing older II. Getting divorced
To protect investors of variable life insurance policies who become disabled, there is a rider called a(n)(A) disability rider(B) waiver of premium(C) early withdrawal rider(D) None of the above
A Regulation D private placement is(A) an offering of securities to no more than 35 unaccredited investors in a 1-month period(B) an intrastate offering(C) an offering of securities worth no more than $5 million in a 12-month period(D) a large offering of commercial paper
Terri Hogan is a customer who wants to invest in securities. Which of the following is most likely to provide Terri with the highest dividend rate?(A) Straight preferred(B) Convertible preferred(C) Participating preferred(D) Callable preferred
George Lincoln opens a margin account and signs a loan consent, hypothecation, and credit agreement. Which of the following statements are TRUE?I. George’s stock may not be kept in street name.II. A portion of George’s stock may be pledged for a loan.III. George will be required to pay interest
When a corporation declares a cash dividend, which of the following is true in relation to the corporation’s balance sheet?(A) Assets decrease.(B) Liabilities increase.(C) Working capital remains the same.(D) Stockholder’s equity increases.
A customer of Dim Outlook Securities decides to close their account. How long after closing the account must Dim Outlook keep the customer records?(A) 6 months(B) 2 years(C) 3 years(D) 6 years
A principal is responsible for approving new accounts opened for I. individuals II. corporations III. banks IV. trusts(A) I only(B) I and II(C) I, II, and III(D) I, II, III, and IV
Which of the following is NOT a characteristic of a real estate investment trust (REIT)?(A) Pass-through treatment of income only(B) Pass-through treatment of income and losses(C) At least 75 percent of the assets must be invested in real-estate-related projects.(D) Ownership of real property

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Series 7 Exam 2024 2025 For Dummies Book + 6 Practice Tests Online 6th Edition Steven M. Rice - Solutions

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