Finra Series-7 Exam Practice Test Instant Access

Question 1

Bubba buys a 5% municipal bond maturing in 15 years that is trading at a market price of 85.

What is the current yield?

A5.00%

B5.88%

C6.49%

D5.10%

Answer : B

5.88%. The current yield is the annual interest divided by the price. The bond will pay $50 of interest per year ($1,000 face amount times 5%). Dividing by the price of $850 equals 5.88%.

Question 2

Which of the following is true of treasury stock?

Ait has voting rights

Bit is entitled to receive dividends

Cit is stock that has not been issued

Dit is stock that has been reacquired by the issuer

Answer : D

it is stock that has been reacquired by the issuer. Treasury stock has no voting rights and is not entitled to receive dividends. The shares have been issued but are no longer outstanding in the market.

Question 3

In the distribution of a new issue underwriters or selling group member are prohibited from:

Aselling to the public at the so-called public offering price

Bselling to another broker or dealer who needs to fill an accommodation order

Cwithholding blocks of a new issue in the member's account

Dall of the above

Answer : C

withholding blocks of a new issue in the member's account. Underwriters and selling group members are prohibited from keeping blocks of a new issue for their own accounts.

Question 4

If recaptured deductions are added to income, recaptured investment tax credits are added to:

Aincome

Bbasis

Cgains

Dtaxes

Answer : D

taxes. Tax credits are not deductible expenses and have no effect on basis.

Question 5

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering.

What subscription ratio is the corporation establishing for each new share?

A6 rights per share

B10 rights per share

C6 million rights per share

D10 million rights per share

Answer : A

6 rights per share. Each share receives a right and there are six million shares receiving rights to one million new shares. So six rights are required for one share.

Question 6

Which of the following is an acceptable deposit to answer an NYSE maintenance call?

AUS savings bond

BSMA

CUS treasury notes

Dall of the above

Answer : C

US treasury notes. A maintenance call requires cash or negotiable securities. Only the treasury notes meet this standard.

Question 7

What does the bond buyer placement ratio represent?

Athe amount of municipal bonds held by banks and insurance companies as a percentage of municipal bonds outstanding

Bthe amount of municipal bonds distributed weekly as a percentage of each week's new issue accounts of more than $1 million

Cthe amount of municipal bonds offered in the daily Blue List as a percentage of the day's new issue amounts of more than $1 million

Dthe par value amount of municipal bonds offered in the Blue List as a percentage of the 30 -day visible supply for competitive and negotiated issues

Answer : B

the amount of municipal bonds distributed weekly as a percentage of each week's new issue accounts of more than $1 million. This is the definition of the ratio.

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