Series 7 Exam Practice Test 31

1. ABC stock pays an annual dividend of $4, has an earnings per share of $8, and a market price of $40. What is ABC's PE ratio?

2. An investor purchases 1 TUV Sep 30 call for a premium of 4. This option will expire

3. All of the following are true regarding limited partners EXCEPT

4. What is the primary objective for an individual who invests in undeveloped land?

5. Which of the following are true about closed-end funds?

I. They may only issue common stock.

II. They are generally listed on an exchange.

III. They have a fixed number of shares outstanding.

IV. They are redeemable.

6. One of your wealthier clients is interested in purchasing a fund. If liquidity is high on their list of investment objectives, which of the following would be the least suitable recommendation?

7. What is the maximum potential loss for an investor who sells a call option?

8. An investor purchased 1,000 shares of WXY at $40. If WXY announces a 5 for 4 split, what is the investor's position after the split?

9. Changes in which of the following non-financial information might change an investor's investment objectives?

I. The investor growing older

II. Getting married or divorced

III. Investment experience

IV. Family responsibilities

10. Which of the following ratios does not measure the liquidity of a company?

11. Which of the following is characteristic of commercial paper?

12. Which of the following is true about advertising for a municipal fund security?

I. It must be approved by a principal of the firm selling the securities.

II. It must not be fraudulent.

III. It must first be approved by the MSRB.

IV. It must be approved by the state administrator in each state in which the security is to be sold.

13. What is the maximum contribution for a 56-year-old investor into a traditional IRA each year?

14. A mutual fund that invests only in securities within a specific industry is called a

15. At what time must an individual begin withdrawals from a Roth IRA?