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

If a customer, Jessica James, gives limited power of attorney to her registered representative, which of the following is TRUE?(A) The registered representative still needs verbal authorization from Jessica for each trade.(B) Jessica must sign a power-of-attorney document.(C) The registered
Jameson and Johnson Securities sent Alyssa a confirmation of her latest trade of Johnstone Corporation common stock. Which of the following items should be on the confirmation?I. The trade date and the settlement date II. Whether Jameson and Johnson acted as an agent or a principal III. The name of
Which of the following statements is TRUE regarding municipal revenue bond issues?(A) The bonds are backed by the issuer’s unlimited taxing power.(B) User fees provide revenue for bondholders.(C) The bonds’ feasibility is not dependent on the earnings potential of the facility or project.(D)
Which of the following is true regarding Penny Stock Disclosure Documents?(A) They may be described orally prior to the customer’s first transaction in penny stocks.(B) They must be provided to the customer in written form prior to the customer’s first transaction in penny stocks.(C) They must
Which of the following investments are suitable for a 21-year-old investor who has limited resources but would like to start investing on a regular basis?I. Growth funds II. Collateralized debt obligations (CDOs)III. Call options IV. Hedge funds(A) I only(B) II and IV(C) I, II, and III(D) I, III,
Common stockholders in a corporation can do which of the following?(A) Vote to elect the corporation’s board of directors(B) Make decisions about the day-to-day dealings, such as the office supply dealer used by the corporation(C) Receive interest payments(D) Expect to be paid par value for their
One of your clients wants to start adding some diversity to their portfolio by investing in mutual funds. Which of the following is the most important consideration when choosing a mutual fund?(A) Whether the fund is load or no-load(B) Management fees(C) Investment objectives(D) 12b1 fees
All of the following can validate a mutilated certificate EXCEPT(A) the issuer(B) the broker-dealer(C) the registrar(D) the paying agent
Which two of the following are true of Roth IRAs?I. Contributions are made from after-tax dollars.II. Contributions are made from pre-tax dollars.III. Distributions are tax-free.IV. Distributions are taxed on the amount above the amount of the contribution.(A) I and III(B) I and IV(C) II and III(D)
Records of written customer complaints must be kept on file for at least(A) 2 years(B) 3 years(C) 4 years(D) 6 years
Where can an investor find the most information about a new municipal issue?(A) In a prospectus(B) In an official statement(C) In a tombstone ad(D) In a registration statement
Ayla Weidman owns 1,000 shares of HIT Corp.HIT issues stock with cumulative voting. What is the maximum number of votes that Ayla can cast for one candidate if there are four vacancies on the board of directors of HIT?(A) 100(B) 250(C) 1,000(D) 4,000
All of the following change the conditions of an option contract EXCEPT(A) a stock split(B) a cash dividend(C) a stock dividend(D) None of the above
Regarding the taxation of dividends from corporate securities, which TWO of the following are TRUE?I. Qualified dividends are taxed at the investor’s income tax rate.II. Qualified dividends are taxed at a maximum rate of 20 percent.III. Nonqualified dividends are taxed at the investor’s tax
Which of the following is the balance sheet equation?(A) assets = liabilities + shareholder’s equity(B) assets + liabilities = shareholder’s equity(C) shareholder’s equity + assets = liabilities(D) None of the above
Which of the following statements is TRUE about revenue bonds?(A) Their value is measured by the municipal project’s capacity for generating revenue.(B) They are secured by a mortgage-backed bond.(C) They are a type of general obligation bond.(D) They are subject to the statutory debt limitations
An investor has a child who will be going to college in 15 years. Which of the following is a suitable investment?(A) T-bills(B) T-notes(C) Treasury receipts(D) Long call options
All of the following are good delivery for a trade of 930 shares EXCEPT(A) 1 certificate for 900 shares, 1 for 30 shares(B) 2 certificates for 400 shares each, 2 for 50 shares each, 2 for 15 shares each(C) 4 certificates for 200 shares each, 10 for 13 shares each(D) 4 certificates for 200 shares
Use the following exhibit to answer this question:NY Close Strike Calls Puts ABC Sep Dec Sep Dec 50.50 40 12 14.13 0.75 1.50 50.50 50 1 2.50 0.88 1.75 50.50 60 0.50 0.75 10 12 What is the break-even point for an investor who purchases an ABC Dec 60 put?(A) 48(B) 50(C) 70(D) 72
Which TWO of the following are TRUE relating to a firm that sells securities out of its own inventory?I. It is acting as a broker.II. It is acting as a dealer.III. It charges a commission.IV. It charges a markup.(A) I and III(B) I and IV(C) II and III(D) II and IV
Mike Smith is one of your clients. Mike is 55 years old, has a wife, two young adults going to college, and two children living at home. You have helped Mike determine his investment profile and how much risk he should be willing to take. However, Mike is hot on a particularly speculative security
The Trade Reporting and Compliance Engine(TRACE) promotes better market transparency by allowing trade details to be released to the investing public that purchases(A) corporate bonds in the OTC secondary market(B) warrants(C) CMOs(D) new issue primary market securities
All of the following are examined by a fundamental analyst EXCEPT(A) earnings per share(B) balance sheets(C) income statements(D) trendlines
What is the minimum maintenance for pattern day trading accounts?(A) 15% of LMV(B) 25% of LMV(C) 30% of LMV(D) 50% of LMV
Mark Schwimmer owns 2,500 shares of TP Corporation. Which of the following actions would dilute Mark’s equity?I. Primary share offerings (registered)II. A stock split III. Payment of a stock offering IV. Secondary share offerings (registered)(A) I only(B) II only(C) I, II, and IV(D) I, II, III,
One of your clients would like to add some municipal bonds to their portfolio. Since your client has enough cash to diversify, you should let them know that some of the ways they could diversify would be I. geographically II. par value of certificates III. type of bonds IV. ratings(A) II, III, and
All of the following may be sources of revenue for a revenue bond EXCEPT(A) property taxes(B) user fees(C) tolls(D) airports
One of your customers feels they were overcharged for a trade and sends your firm a written complaint. What must happen with regard to the complaint?(A) The complaint must be forwarded to the SEC.(B) The complaint must be handled by a principal.(C) The overcharged amount in dispute must be credited
Which of the following statements regarding municipal revenue bonds is NOT true?(A) Revenue bonds are not subject to a debt ceiling.(B) Revenue bonds may be issued by interstate authorities.(C) The maturity date of the issue will usually exceed the useful life of the facility backing the bonds.(D)
If an official statement has a dated date of May 1st, but the first coupon payment is set at December 1st, it means that the first payment is a(A) long coupon(B) mistake printed on the official statement(C) short coupon(D) normal payment for a seven-month bond
RANs, BANs, TANs, and CLNs are issued by municipalities seeking(A) to insure their municipal securities(B) the approval of the SEC(C) long-term financing(D) short-term financing
XYZ is currently trading at 24.10–24.25.A designated market maker in XYZ could enter a bid at which of the following prices?(A) 24.10(B) 24.12(C) 24.25(D) 24.27
Duke Wallwalker purchased an LTSBR Corporation convertible bond at 95 on January 20, 2018. The bond is convertible at $40, and the investor converts his bond into stock on January 21, 2021. If the bond is trading at 104 and the common stock is trading at $42, for tax purposes, these transactions
Which of the following disputes must be resolved using the Code of Arbitration?I. A dispute between a member of FINRA and a registered rep II. A dispute between a member of FINRA and a customer III. A dispute between two members of FINRA IV. A dispute between a bank and a member of FINRA(A) IV
Which of the following securities is/are directly backed by the U.S. government?I. GNMA II. FNMA III. FHLMC(A) I only(B) I and II(C) II and III(D) I, II and III
Gerry Goop purchases a new OID municipal zero-coupon for 80.If Gerry holds the bond to maturity, what is his tax consequence?(A) $0(B) $200 ordinary income over the time the bond is held to maturity(C) $200 capital gain(D) None of the above
Ferret Enterprises pays a quarterly dividend of $0.25 per share and has an EPS of $2.50.What is the dividend payout ratio?(A) 10 percent(B) 40 percent(C) 57 percent(D) 100 percent
John believes that the market is about to become bearish and would like to be able to profit in the event that he is correct. Which of the following investments would meet John’s needs?I. Inverse ETFs II. Selling SPX calls III. High-yield bond funds IV. Selling OEX puts(A) I and II(B) II and
According to MSRB rules, a customer confirmation must include(A) the markup or markdown(B) the location of the indenture(C) the maturity date(D) whether the trade was done on an agency or dealer basis
Which of the following governmental bodies receives no revenue from ad-valorem taxes?(A) County governments(B) State governments(C) School districts(D) Local municipalities
One of your clients is expecting to receive a lot of money over the next three years from a real estate DPP. Your client would like to shelter some of that money by investing in an oil and gas DPP. Which of the following will help your client shelter the most money?(A) Oil and gas income(B) Oil and
The initial maturity for Treasury Inflation Protected Securities is(A) 2, 3, 5, 7, and 10 years(B) 10 to 30 years(C) 6 months to 30 years(D) 5, 10, and 30 years
What is the required beginning date (RBD) for traditional IRAs?(A) The year after the investor reaches the age of 59½(B) The year the investor turns the age of 73(C) April 1st of the year after the investor reaches the age of 73(D) April 15th of the year after the investor reaches the age of 73
Which of the following are important to investors evaluating direct participation programs?I. The economic soundness of the program II. The expertise of the general partner III. The basic objectives of the program IV. The start-up costs(A) I, II, and III(B) I, II, and IV(C) II, III, and IV(D) I,
As part of the USA Patriot Act of 2001, all financial institutions must maintain:(A) Customer Identification Programs(B) a fidelity bond(C) SIPC coverage(D) All of the above
Which of the following items are found on an indenture of a bond?I. The maturity date II. Callable or convertible features III. The coupon rate IV. The name of the trustee(A) II, III, and IV(B) I, II, and III(C) II and III(D) I, II, III, and IV
Regulation SHO covers the(A) resale of restricted securities(B) short sale of securities(C) resale of ETFs(D) margin requirement for listed options
Adjustable-rate preferred stock has a dividend that adjusts according to(A) prevailing interest rates(B) the amount of dividend given to common stockholders(C) the coupon rate on the issuer’s bonds(D) the rate on CMOs
An investor wants to generate some income on a stock that they believe will remain at relatively the same price for the next year or so.Which of the following option positions would meet their goal?(A) Buying a combination(B) Writing a straddle(C) Buying a call(D) Buying a put
You have a new client who is in a high tax bracket and is looking for investments with a tax advantage. Which of the following securities would you LEAST likely recommend?(A) Municipal bonds(B) Collateralized mortgage obligations(C) Retirement plans(D) Direct participation programs
Ginny Gemms purchased 2 LMN 50 calls and paid a premium of 3 for each option. Ginny also purchased 2 LMN 50 puts and paid a premium of 2 for each option. At the time of purchase, LMN was trading at $50.25.Just prior to expiration, LMN was trading at $44.50, and Ginny decided to close her options
One of your 60-year-old clients has a portfolio that consists of 60% invested in stocks, 30% in bonds, and 10% in cash equivalents.Using a standard strategic asset allocation model, they should:(A) sell some of their bonds and purchase more stocks(B) sell some of their stocks and purchase more
What is the principal tax benefit for investing as a limited partner in an exploratory oil and gas drilling program?(A) Tax credits(B) Depreciation expenses(C) Recourse loans(D) Intangible drilling costs
If Buddy Seagull has a limited amount of funds and wants to invest in the pharmaceutical industry but does not want to limit his investments to only one or two companies, which type of fund would be MOST suitable?(A) A hedge fund(B) A sector fund(C) A balanced fund(D) A money-market fund
Which of the following are nonexempt securities?I. Municipal unit investment trust shares II. U.S. government bond fund shares III. Variable annuity accumulation units IV. Fixed annuities(A) I and II(B) III only(C) III and IV(D) I, II, and III
A customer, without giving written authorization, may permit a registered representative to exercise their judgment as to(A) whether to buy or sell(B) the security(C) the price and timing to enter the order(D) the number of shares
If an investor buys a three-year LEAPS contract on issuance, which expires unexercised, what is the investor’s tax consequence at expiration?(A) Short-term capital loss(B) Long-term capital gain(C) Long-term capital loss(D) Short-term capital gain
Grant Goldbarr purchased 1 ABC 60 put at 3.50 and purchased 100 shares of ABC at 62.Six months later, with ABC trading at 64, Grant closes his put for 0.75 and sells his stock at the market price. What is Grant’s gain or loss as a result of these transactions?(A) $75 loss(B) $75 gain(C) $275
An investor has shorted XYZ common stock at 55.XYZ common stock has recently dropped to 30, and the investor expects that the price will continue to decrease over the long term. If the investor would like to hedge against a possible increase in the price, the investor should(A) buy an XYZ call(B)
A customer buys 1 DUD Jun 55 put at 4.50 when DUD is trading at 53.40. Just prior to expiration, the option is trading at 4.55 bid-4.65 asked. If the customer closes their position with a market order, what is the gain or loss?(A) $5 gain(B) $5 loss(C) $160 gain(D) $160 loss
An investor owns the following investments:• 50 New York 5 percent general obligation bonds maturing in 2030 and rated AA• 50 Florida University 6.25 percent revenue bonds maturing in 2031 and rated AA• 50 Nevada Turnpike 5.75 percent revenue bonds maturing in 2030 and rated AA What type of
PE ratio equals(A) the market price divided by the earnings per share(B) annual dividends per common share divided by the market price(C) annual dividends per common share divided by the earnings per share(D) net income minus preferred dividends divided by the number of common shares outstanding
If LMN common stock has a $2.20 dividend, a current yield of 5.0%, a PE ratio of 6, and is trading at $44, its approximate earnings per share is(A) $0.44(B) $2.73(C) $7.33(D) $8.80
A client owns a large amount of Treasury bonds and long-term investment grade corporate bonds. Their main risk concern should be(A) credit risk(B) inflationary risk(C) systematic risk(D) timing risk
Investing in real-estate DPP programs can provide which of the following advantages?I. Depreciation II. Appreciation III. Depletion IV. Cash flow(A) I and II(B) III and IV(C) I, II, and IV(D) I, II, III, and IV
What is the minimum amount of assets your client must have in order to establish a prime brokerage account?(A) $100,000(B) $500,000(C) $1,000,000(D) $5,000,000
Which of the following needs to be filled out on a new account form?I. The customer’s name and address II. The customer’s date of birth III. The type of account IV. The customer’s investment objectives(A) I and II(B) I, II, and III(C) I, II, and IV(D) I, II, III, and IV
Mutual funds must send financial statements to shareholders at least(A) monthly(B) bimonthly(C) quarterly(D) semiannually
Which of the following is true regarding dark pools of liquidity?I. They represent pools of institutional and large retail clients.II. They reduce the amount of transparency of information relating to securities trading.III. Firms trading for their own inventory may be included.IV. Trades executed
Which of the following customer orders are discretionary?I. “Buy 1,000 shares of a growth company”II. “Buy or sell 500 shares of LMN”III. “Buy or sell as many shares of TUV as you think I can handle”(A) I and II(B) II and III(C) I and III(D) I, II, and III
DEF Corporation issued stock to the public at$9 per share. If the manager’s fee was $0.15 per share, the takedown was $0.50 per share, and the concession was $0.30 per share, what was the spread?(A) $0.45(B) $0.65(C) $0.80(D) $0.95
All of the following increase SMA in a long account EXCEPT I. selling securities from the account II. the purchase of additional securities in the account III. receipt of a cash dividend IV. a decrease in the market value of securities held in the account(A) I and III(B) II and IV(C) I, III, and
To process an ACAT, a brokerage firm must be a member of the(A) FINRA(B) NSCC(C) SIPC(D) DRS
All-or-none (AON) orders must be(A) executed in their entirety immediately or the order is cancelled(B) executed in their entirety or the order is cancelled(C) at least partially executed immediately or the order is cancelled(D) at least partially executed or the order is cancelled
If your customer closes the stock position and exercises their OEX put, what is their gain?(A) $155(B) $495(C) $1,100(D) $35,395
One of your customers purchases 100 shares of ARGH at 44.10 and 1 OEX Sep 360 put at 4.50. A few months later, ARGH is trading at 42.55 and the OEX index is trading at
Michael Moneybags purchased 1,000 shares of WOW common stock at $26 per share.Six months later, WOW is trading at $60 and Michael expects a slight decline in the market price for a short period of time. However, Michael has a lot of confidence that WOW is a great company and he remains bullish on
A head and shoulders bottom formation indicates(A) the reversal of a bullish trend(B) the reversal of a bearish trend(C) that the stock is moving sideways(D) that it might be a good time to sell short
One of your clients is interested in purchasing a stock with a beta of 1.6. You can tell them that(A) the stock is equally as volatile as the market(B) the stock is less volatile than the market(C) the stock is more volatile than the market(D) cannot be determined
Which of the following investments requires a registered representative to obtain written verification of an investor’s net worth?(A) Hedge funds(B) Variable annuities(C) Direct participation programs(D) Triple tax-free municipal bonds
Which of the following are true about the annuitization of a variable annuity?I. The value of the annuity units is fixed.II. The number of annuity units is fixed.III. The value of the annuity units varies.IV. The number of annuity units varies.(A) I and II(B) II and III(C) II and IV(D) None of the
All of the following items would be found on the official statement of a municipal bond issue EXCEPT(A) the markup(B) a description of the issuer(C) the coupon rate(D) a legal opinion
Which of the following is NOT an advantage for a customer adding REITs to their portfolio?(A) Having a professionally managed portfolio of real estate assets(B) Preferential dividend treatment(C) Being able to use an REIT as a potential hedge against a negative price movement in other equity
Regulation SHO covers(A) margin requirements for municipal and U.S. government securities(B) the short sale of securities(C) margin requirements for commodities(D) portfolio margining rules
The settlement date for municipal bonds is(A) T+1(B) T+2(C) T+3(D) Up to 5 business days at the purchaser’s discretion
After an options account has been approved, the customer must sign and return a(n)(A) credit agreement(B) OCC(C) OAA(D) ODD
Who maintains a fair and orderly market on the New York Stock Exchange trading floor?(A) Floor brokers(B) Two-dollar brokers(C) Designated Market Makers(D) Order book officials
Priority, precedence, and parity rules of bids and offers dictate trading activity on the(A) OTC pink market(B) fourth market(C) New York Stock Exchange(D) OTC market
Prior to buying or selling options, a customer must first receive a(n)(A) ODD(B) OCC(C) margin agreement(D) OPRA
Which type of margin account requires a minimum equity of $25,000?(A) A portfolio margin account(B) A short account(C) A day-trading account(D) A corporate account
If a client has a margin account with $18,000 in securities and a debit balance of $7,000, and Regulation T is 50 percent, which of the following statements is FALSE?(A) The account has a buying power of$4,000.(B) If the client withdraws any excess equity, the debit balance decreases by the amount
Advertisements including recommendations must include all of the following EXCEPT(A) If the firm is a market maker in the security being recommended(B) If the firm acted as an underwriter in a recent public offering of the security being recommended(C) If the firm participated in the selling group
John Dow and Jane Dough, who are engaged but unmarried, want to open a new account registered as joint tenants with rights of survivorship. Which of the following should occur?(A) A principal of the firm should be notified immediately about the account registration so that a report can be filed
Fred Freedom has held 100 shares of UPP stock for six months and decides to purchase a nine-month call on UPP. If the UPP call option expires and Fred decides to sell the UPP stock four months after the expiration of the call, what is Fred’s tax position?(A) Short-term capital gain or long-term
A registered representative executes the following trades for a speculative investor:• Buy 1 GHI May 30 call at 8• Sell 1 GHI May 35 call at 3 Are these trades suitable for this investor?(A) It is impossible to tell with the information given.(B) Probably not, because the risk is not high
Under which of the following circumstances would an investor face an unlimited maximum loss potential?I. Short 2 DIM Nov 40 puts II. Short 400 shares of DIM common stock III. Short 6 DIM Nov 50 uncovered calls IV. Short 3 DIM Nov 50 covered calls(A) I and II(B) I and III(C) II and III(D) II and IV
An online site that provides detailed information to nonprofessional investors relating to municipal securities, including up-to-theminute prices, is called(A) The Blue List(B) OPRA(C) EMMA(D) NASDAQ
Declan has written a letter of complaint regarding his recent purchase of municipal bonds to his broker-dealer. Upon receipt of the complaint, the broker-dealer must first(A) immediately repurchase the securities at a price at or slightly above Declan’s purchase price(B) guarantee to make the
All of the following are types of state securities registration EXCEPT(A) Notification(B) Coordination(C) Qualification(D) Quantification
CMOs are typically rated(A) AAA(B) AA(C) BBB(D) SP1

Showing 100 - 200 of 424

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

Step by Step Answers