Series 7 Exam Practice Test 26

1. Larry Eagle is a resident of Michigan. Mr. Eagle purchased a Michigan municipal bond. What is the tax treatment of the interest that Larry earns on his Michigan bond?

I. It is exempt from local taxes.

II. It is exempt from state taxes.

III. It is exempt from federal taxes.

2. Charges for services performed by a broker-dealer (such as collection of money due for principal, interest, or dividends; transfer or exchange of securities; safekeeping of securities; and so on) should be

3. An investor wants to invest in a DPP that's relatively safe. Which of the following are you LEAST likely to recommend?

4. All the following activities are a registrar's functions EXCEPT

5. All the following information is required on a preliminary prospectus EXCEPT

6. Prior to opening a day-trading account for a customer, a member shall make a reasonable effort to determine certain information about the customer, including

7. A mutual fund has an NAV of $9.30 and a POP of $10. What is the sales charge of this fund?

8. If the FDA increases pollution standards that are more costly for oil companies, investors who own shares of oil company stock would most likely see the value of their shares decline due to

9. On a competitive bid for a new municipal underwriting, the difference between the syndicate bid and the reoffering price is the

10. If a customer wants to open a cash account at a brokerage firm, the signature(s) of which of the following is/are required?

I. The registered representative

II. The customer

III. The principal

IV. The guarantor

11. Which TWO of the following are TRUE regarding immediate-or-cancel orders?

I. They must be executed immediately.

II. They allow for partial execution.

III. They must be executed in one attempt immediately.

IV. They may be executed in several attempts.

12. All the following securities are typically sold short EXCEPT

13. In an initial margin transaction, an investor purchases 100 shares of WXY at $24 per share. What is the margin call?

14. The indenture of a corporate bond includes all of the following EXCEPT

15. Which of the following items can be found in the certificate of limited partnership?

I. The goals of the partnership and how long it's expected to last

II. The authority of the general partner to charge a fee for making management decisions for the partnership

III. How the profits are to be distributed

IV. The amount contributed by each partner, plus future expected investments