FINRA-SERIES-7 Online Practice Questions and Answers

When opening a brokerage account for a customer, a registered representative must determine the customer's:

A. investment objectives

B. financial resources

C. financial requirements

D. all of the above

In stabilizing a new issue, the manager may make a "syndicate penalty bid". This means that:

A. the underwriter will be penalized his profit on any securities repurchased from his clients

B. all stock purchased will be returned to the issuing corporation

C. the manager will charge the syndicate the value of the shares

D. any shares repurchased are added to the treasury stock of the issuing corporation

In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?

A. the premiums will be approximately the same

B. the LEAPS premium will be higher than the traditional option premium

C. the premium for the traditional option will be higher than the LEAPS option premium

D. LEAPS premiums do not consider time value

Mutual fund salespersons may not represent that a product is like of safer than:

A. an insurance policy

B. a fixed annuity

C. a corporate debt instrument

D. all of the above

An "accumulation unit" of a variable annuity is used to determine which of the following?

A. the value of the annuitant's contract before annuity payments begin

B. the amount of annuity payments to be paid to the owner

C. the amount to be passed to the annuitant's beneficiary

D. the amount returned to the annuitant upon redemption of the account

Bubba is long spot Canadian dollars at 0.7400. If he wants to buy one put option on Canadian dollars with a strike price of 74 and a cost of $0.35, what is Bubba's breakeven price for Canadian dollars?

A. 0.4900

B. 0.7365

C. 0.7400

D. 0.7435

A new stock offering by Bubba Corporation provides details that state between 1,000,000 and 1,500,000 shares will be sold depending upon market conditions. This offering is a:

A. best efforts

B. standby

C. mini-max

D. market potential

Which of the following organizations usually has a prominent role in guiding investment policies of mutual funds?

A. the plan company

B. the management group

C. the custodian bank

D. the underwriter

Which of the following would not normally be a function of an investment banker?

A. providing short-term capital needs to client companies

B. underwriting new issues of securities

C. providing long-term capital needs to client companies

D. assisting in large secondary offerings of securities

Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:

A. not do so under any circumstance

B. do so if he has a history of buying hot issues

C. not do so for his own account, buy may purchase shares for his sister's account

D. do so if his allotment is insubstantial and not disproportionate to public orders