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The FINRA Series-7 (General Securities Representative Qualification Examination (GS)) Certification Exam is a crucial certification for anyone interested in working in the securities industry. The exam is designed to test the knowledge and skills of individuals planning to work as general securities representatives. The certification exam is administered by the Financial Industry Regulatory Authority (FINRA), which is a self-regulatory organization responsible for regulating the securities industry in the United States.
The Series-7 exam is administered by the Financial Industry Regulatory Authority (FINRA), a non-governmental regulatory organization that oversees securities firms and broker-dealers in the United States. The exam consists of 125 multiple-choice questions that cover a wide range of topics, including stocks, bonds, options, mutual funds, investment banking, and other securities-related topics. The exam is timed, and candidates have 225 minutes to complete it.
The FINRA Series-7 (General Securities Representative Qualification Examination) is a certification exam for professionals who want to work in the securities industry. This exam is administered by the Financial Industry Regulatory Authority (FINRA) and is recognized as the industry standard for individuals who want to become a general securities representative. Passing this exam is a requirement for individuals who want to work in the sale of all types of securities products, including stocks, bonds, mutual funds, and options.
NEW QUESTION # 33
Bubba wants to buy a $4 convertible preferred with that has a $50 par value and is exchangeable for common stock at $47.50. If the preferred stock is trading at 52, what does Bubba calculate as the common stock price in order to be at parity with the preferred?
- A. a little more than 54.50
- B. 47.50
- C. 52.00
- D. a little less than 49.38
Answer: D
Explanation:
Explanation/Reference:
Explanation: a little less than 49.38. Bubba needs a calculator to divide the par value of the preferred stock by the price of the common stock. He then divides the result into the price at which the preferred stock is trading.50 divided by 47.50 = 1.05352 divided by 1.053 = 49.38.
NEW QUESTION # 34
Which of the following receives the highest priority of a municipal bond trustee when applying income and revenue derived from a financed toll facility?
- A. bond service account fund
- B. operation and maintenance fund
- C. reserve maintenance fund
- D. renewal and replacement fund
Answer: B
Explanation:
Explanation/Reference:
Explanation: operation and maintenance fund. This receives the top priority followed by debt service, maintenance reserves, and lastly renewal and replacement.
NEW QUESTION # 35
A typical money market instrument carries which of the following?
- A. medium-term maturity date
- B. serial bond maturity date
- C. short-term maturity date
- D. long-term maturity date
Answer: C
Explanation:
short-term maturity. A money market maintains liquidity and is defined as having maturity of less than one year.
NEW QUESTION # 36
An option that permits the holder to exercise the contract only at expiration is referred to as:
- A. Asian style
- B. Nordic style
- C. European style
- D. American style
Answer: C
Explanation:
European style. These options can only be exercised at the expiration date while American style options can be exercised at any time prior to expiration.
NEW QUESTION # 37
Which of the following oil and gas programs does not directly involve drilling?
- A. income
- B. exploratory
- C. developmental
- D. balanced
Answer: A
Explanation:
income. With an income program, the well is already producing. The risk is associated with the commodity price.
NEW QUESTION # 38
Bubba maintains an individual cash account as well as a joint account with his wife, Bubbette. While Bubba is out of town on a fishing trip, Bubbette calls the brokerage firm with an order to buy 100 shares of Great Company, Inc., at the market value for Bubba individual account. It is a stock Bubba has previously informed the brokerage he wanted to buy at the "right price".
What does the brokerage do?
- A. execute the order as requested
- B. buy the stock in the joint account and, after verification from Bubba, journal the security to his individual account
- C. enter the order only after receipt of written instructions to do so from Bubba
- D. refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette
Answer: D
Explanation:
Explanation/Reference:
Explanation: refuse to accept the order unless Bubba has provided a signed trading authorization in favor of Bubbette. Unless Bubbette has been given written trading authorization over Bubba's account, trading orders cannot be accepted from her or any other person.
NEW QUESTION # 39
How often must Investment companies issue financial statements to shareholders?
- A. monthly
- B. semi-annually
- C. quarterly
- D. annually
Answer: B
Explanation:
semi-annually. Investment companies are required to issue financial report semi-annually. Many do so more frequently.
NEW QUESTION # 40
Which of the following statements about the custodian for an open-end mutual fund is correct?
- A. the custodian affords protection against decline in value of fund shares
- B. the custodian may perform an essential clerical service for the fund and its shareholders
- C. the custodian takes part in the sale of fund shares
- D. the custodian performs all management, supervisory, or investment functions
Answer: B
Explanation:
Explanation/Reference:
Explanation: 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.
NEW QUESTION # 41
Bubba Corporation has a registered public offering of 750,000 shares at $40. An underwriter of 30,000 shares is advised by the manager that its retention will be 70%.
How many shares may the underwriter sell to its own customers?
- A. 30,000
- B. as many as it can up to a maximum of 51,000
- C. 9.000
- D. 21,000
Answer: D
Explanation:
Explanation/Reference:
Explanation: 21,000. The underwriter is permitted to retain 70% of the 30,000 shares. The remaining 9,000 shares are kept in the pot by the manager.
NEW QUESTION # 42
Municipal bonds would be least attractive as an investment for which of the following?
- A. a commercial bank
- B. the executive officer of an industrial corporation in the highest income tax bracket
- C. an insurance company
- D. a pension fund
Answer: D
Explanation:
a pension fund. Since the pension fund does not pay income tax, the tax benefits of the municipal bonds are not realized.
NEW QUESTION # 43
To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?
- A. it cannot exceed $1,500,000 in value
- B. it must consist of common stock only
- C. it must be sold only to bona fide residents of one state
- D. it must be approved by the SEC
Answer: C
Explanation:
it must be sold only to bona fide residents of one state. Under Rule 147 intrastate offerings are sold only to residents of one state and cannot be sold outside that state for nine months. All the other choices are incorrect about the rule.
NEW QUESTION # 44
An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?
- A. an exempt security
- B. a mutual fund
- C. a hot issue
- D. a private placement
Answer: D
Explanation:
a private placement. Normally, private placements are conducted with an investment letter.
NEW QUESTION # 45
Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:
- A. not change the bid unless first notifying the other dealer
- B. change the bid only with prior approval of the other dealer
- C. change the bid
- D. not change the bid
Answer: C
Explanation:
change the bid. A workable bid indicates a price level where a dealer is willing to negotiate business. It is not a firm bid and may be changed before becoming firm.
NEW QUESTION # 46
Bubba wants to buy 500 shares of an NYSE listed stock at 38.87 but he wants to buy at one time, right away, or else forget it.
What kind of order should the registered representative enter?
- A. fill or kill
- B. all or none
- C. immediate or cancel
- D. now or never
Answer: A
Explanation:
fill or kill. This type of order is cancelled if the entire amount cannot be executed.
NEW QUESTION # 47
In stabilizing a new issue, the manager may make a "syndicate penalty bid". This means that:
- A. all stock purchased will be returned to the issuing corporation
- B. the underwriter will be penalized his profit on any securities repurchased from his clients
- C. any shares repurchased are added to the treasury stock of the issuing corporation
- D. the manager will charge the syndicate the value of the shares
Answer: B
Explanation:
Explanation/Reference:
Explanation: the underwriter will be penalized his profit on any securities repurchased from his clients.
Since clients sell shares back to the syndicate shortly after the offering, the underwriter has not made a proper distribution. The underwriter therefore may be penalized any profit.
NEW QUESTION # 48
Which of the following is not true about mutual funds and variable annuities?
- A. the holder of each must pay income taxes on the dividends received each year
- B. the registered representative must have FINRA registration to solicit either one
- C. the payout of each depends on the investment results of the securities owned in the portfolio
- D. each is regulated under the Investment Company Act of 1940
Answer: A
Explanation:
Explanation/Reference:
Explanation: the holder of each must pay income taxes on the dividends received each year. Only the holder of mutual fund shares must pay income tax on annual dividends. This is "not" true of annuity owners. The other choices are true statements.
NEW QUESTION # 49
Under what circumstances may a registered investment company change its investment objective?
- A. after SEC approval
- B. after it obtains a new charter from the state secretary
- C. after approval by a majority vote of the shareholders
- D. after providing notice that is recorded in the Federal Register
Answer: C
Explanation:
Explanation/Reference:
Explanation: after approval by a majority vote of the shareholders. All vital interests of the shareholders are subject to their majority vote.
NEW QUESTION # 50
Limited partnerships try to avoid recapture because:
- A. it may subject the partnership to the add-on tax
- B. it always increases the investor's tax bracket
- C. it turns potential capital gains into current taxable income
- D. it increases the risk of a tax audit
Answer: C
Explanation:
it turns potential capital gains into current taxable income. Recapture is taxed as ordinary income, not capital gain. The other choices are not true.
NEW QUESTION # 51
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