FINRA Series 7 Exam Practice Test 19

1. Under which of the following circumstances would an investor face an unlimited maximum loss potential?

I. Short 2 DIM Nov 40 puts

II. Short 400 shares of DIM common stock

III. Short 6 DIM Nov 50 uncovered calls

IV. Short 3 DIM Nov 50 covered calls

2. A registered representative executes the following trades for a speculative investor:

I. Buy 1 GHI May 30 call at 8

II. Sell 1 GHI May 35 call at 3

III. Are these trades suitable for this investor?

3. Fred Freedom has held 100 shares of UPP stock for six months and decides to purchase a nine-month call on UPP. If the UPP call option expires and Fred decides to sell the UPP stock four months after the expiration of the call, what is Fred's tax position?

4. John Dow and Jane Dough, who are engaged but unmarried, want to open a new account registered as joint tenants with rights of survivorship. Which of the following should occur?

5. Advertisements including recommendations must include all of the following EXCEPT

6. If a client has a margin account with $18,000 in securities and a debit balance of $7,000, and Regulation T is 50 percent, which of the following statements is FALSE?

7. Which type of margin account requires a minimum equity of $25,000?

8. Prior to buying or selling options, a customer must first receive a(n)

9. Priority, precedence, and parity rules of bids and offers dictate trading activity on the

10. Who maintains a fair and orderly market on the New York Stock Exchange trading floor?

11. After an options account has been approved, the customer must sign and return a(n)

12. The settlement date for municipal bonds is

13. Regulation SHO covers

14. Which of the following is NOT an advantage for a customer adding REITs to their portfolio?

15. All of the following items would be found on the official statement of a municipal bond issue EXCEPT