BraindumpsPass Series-7 Real Exam Question Answers Updated [Aug 31, 2023]
Easily To Pass New FINRA Series-7 Dumps with 402 Questions
NEW QUESTION # 100
What is the possible reward for investing in raw land?
- A. deferred income
- B. lack of investment risk
- C. potential capital appreciation
- D. large deductions
Answer: C
Explanation:
potential capital appreciation. This is the only correct choice. Any income is not deferred, raw land cannot be depreciation for a large deduction, and there is substantial risk.
NEW QUESTION # 101
In a monthly review of customer statements, Bubba notices that one of his firm's clients has paid for seven purchases five days late.
What does he do?
- A. ascertains whether the client had a sufficient bank balance on settlement date
- B. nothing because this is not a violation provided the securities were not listed on the NYSE
- C. decides this situation is acceptable provided payment was received before any securities were sold
- D. ascertains that extensions had been obtained under Reg T
Answer: D
Explanation:
ascertains that extensions had been obtained under Reg
T. If valid reasons exist, extension of time for payment may be obtained.
NEW QUESTION # 102
A front-end loan mutual fund plan is most suitable for:
- A. an automatic withdrawal plan
- B. a contractual plan
- C. an optional withdrawal plan
- D. a voluntary accumulation plan
Answer: B
Explanation:
Explanation/Reference:
Explanation: a contractual plan. The other choices are not suitable. In a voluntary accumulation plan, the load is level. In an automatic withdrawal plan, the load is front -end because the bulk of the sales charge is taken early in the life of the plan.
NEW QUESTION # 103
Limited partnerships try to avoid recapture because:
- A. it always increases the investor's tax bracket
- B. it may subject the partnership to the add-on tax
- C. it increases the risk of a tax audit
- D. it turns potential capital gains into current taxable income
Answer: D
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 # 104
Bubba owns stock with cumulative voting rights. There are five vacancies on a board and he owns 100 shares of stock. Bubba is entitled to cast the following votes:
- A. a total of 100 votes
- B. a total of 100 votes per
- C. a total of 500 votes
- D. you are not allowed to vote
Answer: C
Explanation:
500 votes. Under cumulative voting, the number of directors is multiplied by the number of shares owned. The votes may be cast all for a single director or divided in any manner among the directors.
NEW QUESTION # 105
The most common type of bond issued by a well-established company is:
- A. a convertible
- B. a debenture
- C. an open-end mortgage
- D. a senior secured note
Answer: B
Explanation:
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.
NEW QUESTION # 106
Under which of the following conditions are homeowners most likely to refinance existing mortgages?
- A. when the yield curve is inverted
- B. when interest rates rise
- C. when interest rates fall
- D. when interest rates are stable
Answer: C
Explanation:
Explanation/Reference:
Explanation: when interest rates fall. Homeowners are most likely to refinance when rates are lower than the past.
NEW QUESTION # 107
To accommodate a customer's order to buy an over-the-counter stock, a broker/dealer is permitted to:
- A. all of the above
- B. act as agent on this transaction
- C. sell these shares short to the customer
- D. sell him shares from the firm's inventory
Answer: A
Explanation:
Explanation/Reference:
Explanation: all of the above. All of the choices are normal ways for the broker to fill the customer's order.
NEW QUESTION # 108
At the time it underlying stock is trading at 48, Bubba buys a listed call option with a $50 strike price for $300. At what minimum price must that stock trade for Bubba to recover his investment (ignoring commission and taxes)?
- A. $53
- B. $51
- C. $48
- D. $45
Answer: A
Explanation:
$53. The breakeven price on the call is the premium plus the strike price. Since the premium is $3 per share, the breakeven price is $53.
NEW QUESTION # 109
The gross spread in a new issue depends upon which of the following?
- A. the amount of the issue
- B. the past record of the issuing corporation
- C. all of the above
- D. the type of industry in which the issuer is engaged
Answer: C
Explanation:
Explanation/Reference:
Explanation: all of the above. The gross spread (or "underwriting spread") depends upon all of these factors.
NEW QUESTION # 110
Which securities do not receive dividends?
- A. warrants
- B. common stock
- C. preferred stock
- D. ADRs
Answer: A
Explanation:
Explanation/Reference:
Explanation: warrants. All of the other choices receive dividends if they are declared. But only warrants are a specific security that never pays dividends.
NEW QUESTION # 111
The accounting statement that represents a company's financial position on a particular date is the:
- A. Profit and Loss
- B. income statement
- C. cash flow statement
- D. balance sheet
Answer: D
Explanation:
Explanation/Reference:
Explanation: balance sheet. This report reflects the entire condition of the company by showing all assets, liabilities, and components of net worth.
NEW QUESTION # 112
Which of the following forms of underwriting is least likely for an offering of municipal bonds?
- A. best efforts
- B. firm commitment
- C. negotiated
- D. competitive bid
Answer: A
Explanation:
Explanation/Reference:
Explanation: best efforts. A best efforts deal least likely for a municipal securities offering. It is most often associated with small corporate stock or limited partnership offerings. Municipal securities are usually competitive bid or negotiated. Both of these types are firm commitment.
NEW QUESTION # 113
Maintaining a fair and orderly market and acting as a broker's broker are dual functions of the:
- A. odd-lot dealer
- B. two-dollar broker
- C. specialist
- D. competitive trader
Answer: C
Explanation:
specialists. This description defines the function of the specialists.
NEW QUESTION # 114
Bubba sells short 100 XYZ at $60 and makes the required Regulation T deposit of 50%. XYZ then rises I price to $65.
At this point what is the credit balance?
- A. $6,000
- B. $2,500
- C. $3,500
- D. $9,000
Answer: D
Explanation:
$9,000. Credit balances in short accounts do not change because of fluctuation in market prices. The initial deposit of $3,000 ($6,000 x 50%) plus the $6,000 from the short sale leave a credit balance of $9,000.
NEW QUESTION # 115
Which of the following sources provides news of prospective municipal securities sales to underwriters?
- A. the SEC News Digest
- B. the Blue List
- C. The Wall Street Journal
- D. the daily Bond Buyer
Answer: D
Explanation:
Explanation/Reference:
Explanation: the daily Bond Buyer. News is covered in the daily Bond Buyer as well as Munifacts, which is operated by the daily Bond Buyer. The Blue List shows only current offerings, not prospective ones.
NEW QUESTION # 116
Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40.
What conversion ratio does Bubba determine?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: A
Explanation:
25. The conversion ratio is how many shares of common stock Bubba obtains by converting. Divide the bond price - $1,000 for a single bond - by the $40 conversion price.
NEW QUESTION # 117
The minimum denomination for a US treasury bond is:
- A. $100
- B. $1,000
- C. $100,000
- D. $10,000
Answer: B
Explanation:
$1,000. This is the minimum denomination. Normally, US treasury bonds are in much larger denominations.
NEW QUESTION # 118
On which of the following is depreciation permitted?
- A. rental property whose value is declining
- B. property whose maintenance exceeds the investment credit
- C. residential property not used for business
- D. equipment subject to recapture
Answer: C
Explanation:
Explanation/Reference:
Explanation: residential property not used for business. Depreciation is only permitted on income- producing property.
NEW QUESTION # 119
Which of the following is identified as a funded debt instrument?
- A. corporate bond
- B. Series EE savings bond
- C. US treasury bond
- D. Fannie Mae bond
Answer: A
Explanation:
corporate bond. All of the other securities are issues backed by the US government, which are not considered funded debt.
NEW QUESTION # 120
The principal underwriter of an open-end investment company is frequently called:
- A. participating investment advisor
- B. investment counselor
- C. sponsor
- D. selling group member
Answer: C
Explanation:
Explanation/Reference:
Explanation: sponsor. Also called the "distributor", these terms are interchangeable for an open -end investment company.
NEW QUESTION # 121
In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4.
What is the price for XYZ stock at which Bubba will breakeven?
- A. $94
- B. $87
- C. $79
- D. $86
Answer: C
Explanation:
$79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).
NEW QUESTION # 122
Partnership democracy is:
- A. a synonym for silent partner
- B. the sharing of management by all partners
- C. permission granted to the general partner to act outside the partnership agreement
- D. a prohibition against control by a single partner
Answer: C
Explanation:
Explanation/Reference:
Explanation: permission granted to the general partner to act outside the partnership agreement. The limited partners may approve of the general partner pursuing an act that is contrary to the partnership agreement.
NEW QUESTION # 123
Which of the following is not prohibited of a general partner?
- A. buying or selling assets of the partnership except to foster the business of the partnership
- B. accepting compensation from any other partnership
- C. competing in any way with the partnership
- D. acting in such a way as to impede the orderly business of the partnership
Answer: B
Explanation:
accepting compensation from any other partnership. A general partner may be the partner is more than one partnership.
NEW QUESTION # 124
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