Series 7 Practice Questions
Prepare for Series 7 with more than an answer.
- Exam fee
- $300 USD
- Level
- Representative
- Valid for
- Registration remains valid while associated with a member firm
Domains covered on the exam 4
- Seeks Business for the Broker-Dealer from Customers and Potential Customers7%
- Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives9%
- Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records73%
- Obtains and Verifies Customers' Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactions11%
- 1
When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?
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Correct answer: B
B--Explanation:
it is unchanged. The debentures add to liabilities and to cash (an asset) received from the sale. There is no effect on net worth. - 2
Which of the following is not a marketable security?
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Correct answer: A
A--Explanation:
Series EE bonds. All the other securities may be traded. Series EE bonds are purchased and held to maturity. They are not tradable. - 3
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:
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Correct answer: A
A--Explanation:
breakout. An upward move through a resistance level that is confirmed by heavy volume is called a breakout. - 4
Under an initial federal requirement of 70% equity, Bubba purchases 100 shares of XYZ at $40 per share and wishes to satisfy the margin call by delivering another listed security into his account.
He may do so by depositing stocks with a market value of:
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Correct answer: C
C--Explanation:
$9,333. If Bubba were depositing cash, he would need $2,800 (70% x $4,000). Since he is depositing stock, he would have to deposit enough with loan value of $2,800. To arrive at this, divide $2,800 by the 30% loan value to obtain $9,333. - 5
A broker-dealer is participating in the underwriting of a new stock issue. During the cooling-off period, which of the following activities is permissible?
timeline title New Issue Underwriting Process section Pre-Filing Period Due Diligence & Filing S-1 section Cooling-Off Period (20 days) Distribute Red Herring : Indications of Interest Road Show Blue Sky Registration section Post-Effective Period Final Prospectus Delivery Confirm Sales Stabilization (if needed)Show answer details
Correct answer: C
The cooling-off period is the time between the filing of the registration statement (S-1) with the SEC and the effective date. During this period, underwriters are permitted to gauge investor interest. Key permissible activities include distributing the preliminary prospectus (also known as a 'red herring') and accepting non-binding indications of interest. Accepting payment, confirming sales, and distributing final research are prohibited until the registration becomes effective.
- 6
Approval for a registered investment company to change is investment objective from income to growth is required from which of the following?
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Correct answer: A
A--Explanation:
a majority of the shareholders. Any factors that materially affect the interests of shareholders must be approved by a majority vote of the shareholders. - 7
According to FINRA Conduct Rules, a party judged guilty of a rule infraction by the District Business Conduct Committee may then appeal to:
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Correct answer: C
C--Explanation:
the FINRA Board of Governors. The first appeal is to the Board of Governors, then to the SEC, and then to the federal courts. - 8
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:
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Correct answer: D
D--Explanation:
60 days. ERISA permits 60 days for rollovers. - 9
Municipal syndicate allocation procedures are described in which of the following?
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Correct answer: D
D--Explanation:
syndicate account letter. This letter is sent by the manager of a competitive bid syndicate to the other members. The priority and other procedures, including allocation amounts, are specified in the letter.
Members signify acceptance by signing the letter and returning it to the manger. - 10
Which of the following have a stated interest rate on the face of the certificates?
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Correct answer: C
C--Explanation:
both B and C. Treasury notes and treasury bonds have stated interest rates. Treasury bills are always sold at a discount to the face amount payable at maturity.
