Series 7 Exam Question 4: Answer and Explanation

Question: 4

Which of the following are exempt securities?

I. Municipal bonds

II. Securities issued by savings institutions

III. Variable annuities

IV. Commercial paper with an initial maturity of 365 days or less

• A. I and II
• B. I, III, and IV
• C. II, III, and IV
• D. I, II, III, and IV

Correct Answer: A

Explanation:

A. Exempt securities are securities that don't have to be registered with the SEC before issuance. Out of the choices you were given, municipal bonds and securities issued by savings institutions are exempt securities. Variable annuities are not exempt; fixed annuities are. Commercial paper has to have an initial expiration of 270 days or less to be exempt, not 365.