Finra Series-7 Exam Questions Instant Access

Question 1

Which of the following does not decrease basis?

Acash or property paid out

Bdepletion of real property

Closses

Dincome from extraordinary sources

Answer : D

income from extraordinary sources. Single events, such as the sale of property, do not affect basis.

Question 2

Bubba opens a margin account and sells short 100 shares of XYZ at $50. Assuming a Reg T requirement of 50%, what is the opening balance in Bubba's account?

A$10,000

B$7,500

C$5,000

D$2,500

Answer : B

$7,500. The short sale transaction is $5,000. The Reg T required deposit is $2,500 ($5,000 x 50%). Adding both results in $7,500.

Question 3

The FINRA markup policy requires that over-the-counter transactions with a customer be at:

Aprices reasonably related to the current market price of the security

Ba markup not to exceed 5% of the current offering price

Cprices reasonably related to the dealer's cost

Da markup based on previous activity in the customer's account

Answer : A

prices reasonably related to the current market price of the security. All markups must be based upon the current market rather than the dealer's cost.

Question 4

Bubba entered an order to sell long 100 shares of XYZ at 38.75 stop limit. Thereafter, the following round-lot transactions occurred: 38.75, 38.65, 38.50.

At what price was Bubba's order executed?

A38.75

B38.65

C38.50

Dit was never executed

Answer : D

it was never executed. The first transaction at 38.75 elected the order, but since it was both a stop order and a limit order, there was never another transaction at 38.75. Consequently, Bubba's order was never executed.

Question 5

Which of the following would not normally be a function of an investment banker?

Aproviding short-term capital needs to client companies

Bunderwriting new issues of securities

Cproviding long-term capital needs to client companies

Dassisting in large secondary offerings of securities

Answer : A

providing short-term capital needs to client companies. The short-term capital needs of companies are normally the function of commercial bankers, not investment bankers.

Question 6

Municipal bond brokers generally conduct the following:

Atrade for dealer banks

Btrade for non-bank dealers

Ctrade for their own account

Dboth A and B

Answer : D

both A and B. Brokers generally operate as agents attempting to locate buyers or sellers for bond dealers. They do not trade for their own accounts or deal directly with individual investors.

Question 7

Service charges by a FINRA dealer for transfer and safekeeping of customer securities held in street name:

Amay not be levied under FINRA Conduct Rules

Bmay not be levied unless there is no trading in the account for more than six months

Cmay be levied only if the security has a value of less than $5,000

Dmay be levied only if the charge if fair, reasonable, and non-discriminatory

Answer : D

may be levied only if the charge if fair, reasonable, and non-discriminatory. This is the standard in the FINRA rules.

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