Series 7 Exam Practice Test 24

1. Which TWO of the following are TRUE relating to a firm that sells securities out of its own inventory?

I. It is acting as a broker.

II. It is acting as a dealer.

III. It charges a commission.

IV. It charges a markup.

2. Use the following exhibit to answer this question:

NY CloseStrikeCallsPuts
ABCSepDecSepDec
50.50401214.130.751.50
50.505012.500.881.75
50.50600.500.751012

What is the break-even point for an investor who purchases an ABC Dec 60 put?

3. All of the following are good delivery for a trade of 930 shares EXCEPT

4. An investor has a child who will be going to college in 15 years. Which of the following is a suitable investment?

5. Which of the following statements is TRUE about revenue bonds?

6. Which of the following is the balance sheet equation?

7. Regarding the taxation of dividends from corporate securities, which TWO of the following are TRUE?

I. Qualified dividends are taxed at the investor's income tax rate.

II. Qualified dividends are taxed at a maximum rate of 20 percent.

III. Nonqualified dividends are taxed at the investor's tax rate.

IV. Nonqualified dividends are taxed at a maximum rate of 20 percent.

8. All of the following change the conditions of an option contract EXCEPT

9. Cain Weidman owns 1,000 shares of HIT Corp. HIT issues stock with cumulative voting. What is the maximum number of votes that Cain can cast for one candidate if there are four vacancies on the board of directors of HIT?

10. Where can an investor find the most information about a new municipal issue?

11. Records of written customer complaints must be kept on file for at least

12. Which two of the following are true of Roth IRAs?

I. Contributions are made from after-tax dollars.

II. Contributions are made from pre-tax dollars.

III. Distributions are tax-free.

IV. Distributions are taxed on the amount above the amount of the contribution.

13. All of the following can validate a mutilated certificate EXCEPT

14. One of your clients wants to start adding some diversity to their portfolio by investing in mutual funds. Which of the following is the most important consideration when choosing a mutual fund?

15. Common stockholders in a corporation can do which of the following?

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