Series 7 Exam Question 289: Answer and Explanation

Question: 289

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

Correct Answer: A


A. The Series 7 exam tests you on your knowledge of TRACE. The trade reporting system known as TRACE is approved by FINRA for corporate bonds trading in the OTC secondary market. Therefore, Choice (A) is the correct answer. Choices (B), (C), and (D) are incorrect because warrants are not applicable to corporate bond trading, and municipal securities and asset-backed securities are specifically excluded from the TRACE reporting requirements.

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