Finra Series-7 Exam Questions Instant Access

Question 1

Which of the following best describes depreciation?

Atax credit available to investors in heavy equipment

Bdeductions from gross income to offset lower value of equipment

Creturn of principal from real estate investors

Dcapitalized an amortized maintenance costs

Answer : B

deductions from gross income to offset lower value of equipment. Depreciation is the deduction of costs for capital assets as their value declines.

Question 2

A limit order is best describes as an order:

Ato buy at a specific price or lower

Bto sell at a specific price or higher

Cto be executed at a specific price or better

Dthat is in effect for only one day

Answer : C

to be executed at a specific price or better. Choice A is only a buy limit order and choice B is only a sell limit order. Choice C is the correct definition of a ''limit order''.

Question 3

A dealer buys 100 shares of XYZ common, which is an actively traded stock, at 23.50. Three days later, when XYZ common is quoted at 19.50 - 19.75, he sells the 100 shares to a customer.

The basis for the dealer's markup is:

A10 5/8

B19 7/8

C23 1/2

D5% above cost

Answer : B

19 7/8. The markup is always based on the current market price, not upon cost. Therefore, the markup is based on the offering side of the current quotation.

Question 4

The most common type of bond issued by a well-established company is:

Aa debenture

Ba senior secured note

Ca convertible

Dan open-end mortgage

Answer : A

a debenture. Because of the company's well-established financial condition, it issues a debenture that has no specific collateral and is only backed by the creditworthiness of the issuer.

Question 5

Bubba Securities, Inc. offers 3,000,000 shares of Top Notch Manufacturing Corporation common stock at $27 per share. The next day an advertisement appears in the Wall Street Journal announcing the offering and listing the names of some of the underwriting firms.

This ad is commonly referred to as a:

Apublic offering

Btombstone ad

Csales directive

Dsyndicate announcement

Answer : B

tombstone ad. Tombstone ads are used to announce new issues. They do not offer to buy or sell securities. They are informational only.

Question 6

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

Aif it is accompanied by a red herring

Bif he has permission of his employer

Cif his firm is not the managing underwriter

Dunder no circumstances

Answer : D

under no circumstances. The representative may send the red herring but not a research report of his firm.

Question 7

With the Regulation T requirement at 50%, a firm wishes to impose house rules that require a minimum equity of 40%.

Which of the following is true?

Athis cannot be implemented because the level is below Reg T

Bthis cannot be implemented since maintenance requirements are only 25% of equity for long positions

Cthis is permissible

Dthis action must be approved by the FRB and FINRA

Answer : C

this is permissible. Firms may establish house rules as long as they are at least as strict as the minimum maintenance requirements. Reg T only dictates an initial requirement and does not address minimum equity.

Finra General Securities Representative Examination (GS) Series-7 Exam Questions