Series7 Dumps PDF - Series7 Real Exam Questions Answers
Get Started: Series7 Exam [2022] Dumps FINRA PDF Questions
NEW QUESTION 213
Bubba Corporation has a profit sharing plan. The company president, Bubba, is receiving the maximum
plan contribution amount. The corporation has one other employee, who is eligible for the plan. If this
person earns $12,000 per year, how much must be deposited in the plan for the employee?
- A. $6,000
- B. $3,000
- C. $12,000
- D. $1,800
Answer: B
Explanation:
$3,000. The maximum contribution is 25% of compensation. That percentage of $12,000 is
$ 3,000.
NEW QUESTION 214
Bubba buys a US treasury bond. The interest he earns is:
- A. subject to state income tax but exempt from federal income tax
- B. exempt from federal and state income tax
- C. subject to federal and state income tax
- D. subject to federal income tax but exempt from state income tax
Answer: D
Explanation:
subject to federal income tax but exempt from state income tax. The interest on US
government securities is taxed by the US government but not by state governments. The opposite is true
of bonds issued by a state, which are exempt from federal tax but subject to state taxes-except for taxes
of the state that issues them.
NEW QUESTION 215
Which of the following rights does an ADR holder not have?
- A. preemptive rights
- B. the right to vote for your mother-in-law as a board member
- C. the right to transfer ownership
- D. the right to see financial statements
Answer: A
Explanation:
preemptive rights. Holders of ADRs do not have preemptive rights, although they have most
other rights of shareholders, including the right to vote for board members-even a mother-in-law
NEW QUESTION 216
A buy-in of a customer's sale transaction is mandated if the securities have not been received by the
broker/dealer within how many business days following the settlement date:
- A. 0
- B. 1
- C. 2
- D. 3
Answer: B
Explanation:
10. If a customer fails to deliver securities within ten days after settlement, the broker must
repurchase the securities.
NEW QUESTION 217
Prospective bidders for a municipal bond being issued should consult what document for relevant
procedures?
- A. the offering circular
- B. the SEC Registration Statement
- C. the Eastern account agreement
- D. the official notice of sale
Answer: D
Explanation:
the official notice of sale. All bid requirements are found in the official notice of sale.
NEW QUESTION 218
In a 401(k) plan, when are employee's contributions of compensation deferral vested?
- A. after 5 years
- B. the same as the employer's contributions
- C. after 2 years
- D. immediately
Answer: D
Explanation:
immediately. The employer's contributions may be subject to a vesting schedule, but the
employee's contributions are immediately vested.
NEW QUESTION 219
Under the terms of the 1970 Securities Investor Protection Act, what is the status of a customer whose
account assets exceed SIPC insurance coverage when his broker/dealer becomes insolvent?
- A. the customer becomes a general creditor of the insolvent firm for the amount of deficiency
- B. all broker/dealers are assessed to fully satisfy the deficiency
- C. SIPC will issue a debenture to guarantee eventual repayment of the deficiency
- D. the US Treasury is pledged to make up the deficiency
Answer: A
Explanation:
the customer becomes a general creditor of the insolvent firm for the amount of deficiency.
After the SIPC coverage is exhausted, the customer becomes a general creditor. Due to the insolvency of
the broker/dealer, there is no likelihood of the customer receiving restitution.
NEW QUESTION 220
Which of the following is not prohibited of a general partner?
- A. buying or selling assets of the partnership except to foster the business of the partnership
- B. acting in such a way as to impede the orderly business of the partnership
- C. accepting compensation from any other partnership
- D. competing in any way with the partnership
Answer: C
Explanation:
accepting compensation from any other partnership. A general partner may be the partner is
more than one partnership.
NEW QUESTION 221
What is the loan value on a call option held in a customer's margin account?
- A. 50%
- B. 30%
- C. 0
- D. the compliment of the FRB initial margin requirement for listed stocks
Answer: C
Explanation:
0. Options do not have loan value, except for long-term LEAPS.
NEW QUESTION 222
Which of the following is not true about brokerage accounts?
- A. in a community property state a married woman must open a brokerage account with her husband
- B. if a fiduciary intends to buy stocks in a margin account the trust agreement authorizing the margin
transactions must be kept on file at the brokerage firm - C. numbered accounts are permissible provided there is a record kept on file at the brokerage firm
attesting to the actual ownership - D. stock purchased in a custodian account may not be purchased on margin or held in bearer form
Answer: A
Explanation:
in a community property state a married woman must open a brokerage account with her
husband. All of the other choices are true. Only choice A is "not" true.
NEW QUESTION 223
Bubba buys one XYZ September 50 call at $7 and sells one XYZ September 60 call at $3. At that time,
XYZ stock is at $55. Bubba has no other stock positions. What is Bubba's maximum possible profit?
- A. unlimited
- B. $1,000
- C. $600
- D. $500
Answer: C
Explanation:
$600. The maximum profit is the difference between strike prices less the debit amount. The
debit amount is $4 ($7 - $3). The difference between strike prices is $10 ($60 - $50). Multiply the $6
difference by 100, which is the number of shares on one option.
NEW QUESTION 224
The preferred stock of Greatest Technology Corporation has a $100 par and is convertible into four
shares of common stock. The preferred is trading at 104.50. The preferred is callable at 101. If the
common stock price is presently 27.89, which of the following actions would be a successful arbitrage:
- A. purchase both the common and the preferred stocks as a hedge against further market risk
- B. purchase the preferred stock and sell an appropriate amount of the common stock "short exempt"
- C. purchase the preferred stock and let it be called, which is inevitable at these market prices
- D. purchase 400 shares of common stock and sell 100 shares of preferred stock as "short exempt" (that is,
the sale is exempt from the uptick rule)
Answer: B
Explanation:
purchase the preferred stock and sell an appropriate amount of the common stock "short
exempt". Arbitrage is the nearly simultaneous purchase and sale of equal securities in different markets
for a profit. Selling four shares of common stock for every one share of preferred stock purchased
provides a profit. The transactions involve the same number of common shares because the preferred is
convertible to common at a four to one ratio.
NEW QUESTION 225
FINRA advertising standards permit a dealer to state that a CMO has an implied AAA rating if the
securities are issued:
- A. by a US government agency
- B. by a private issuer who has not yet received an expected AAA rating
- C. in amounts less than $1,000,000
- D. with an average life no longer than ten years
Answer: A
Explanation:
by a US government agency. Since government agencies do not apply for ratings, it is
permissible to state that its issues have an "implied AAA rating". Private issuers must receive a rating in
order to state it in advertising.
NEW QUESTION 226
Upon opening a new account for a customer, a registered representative should:
- A. determine what is suitable for the customer based upon his financial background
- B. investigate the customer's credit rating
- C. inquire about age
- D. all of the above
Answer: D
Explanation:
all of the above. These are required I Rule 405 of the NYSE and under suitability
requirements in the Rules of Fair Practice of the FINRA.
NEW QUESTION 227
According to FINRA Conduct Rules, a party judged guilty of a rule infraction by the District Business
Conduct Committee may then appeal to:
- A. the FINRA Board of Governors
- B. the SEC
- C. the FINRA Board of Arbitration
- D. the public court system
Answer: A
Explanation:
the FINRA Board of Governors. The first appeal is to the Board of Governors, then to the
SEC, and then to the federal courts.
NEW QUESTION 228
Bubba entered an order to sell long 100 shares of XYZ at 38.75 stop limit. Thereafter, the following
round-lot transactions occurred: 38.75, 38.65, 38.50. At what price was Bubba's order executed?
- A. 38.75
- B. 38.65
- C. it was never executed
- D. 38.50
Answer: C
Explanation:
it was never executed. The first transaction at 38.75 elected the order, but since it was both a
stop order and a limit order, there was never another transaction at 38.75. Consequently, Bubba's order
was never executed.
NEW QUESTION 229
Bubba's margin account has $2,000 of SMA. If he buys $10,000 of new securities, how much additional
cash must he deposit assuming a Reg T requirement of 50%?
- A. $4,800
- B. $6,000
- C. $5,000
- D. $3,000
Answer: D
Explanation:
$3,000. The purchase requires $5,000 ($10,000 x 50%). Since the existing SMA is $2,000
Bubba only needs to deposit the remaining $3,000.
NEW QUESTION 230
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