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FINRA Series-7 Exam Questions

FINRA Series-7 Exam Questions Answers

Series 7 General Securities Representative Qualification Examination (GS)

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FINRA Series-7 Practice Test Questions ( Updated) – Real Exam Questions & Dumps PDF

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FINRA Series-7 Sample Questions – Free Practice Test & Real Exam Prep

Question #1

The general purpose of the Securities Act of 1933 is to:

  • A. regulate the activities of investment advisers 
  • B. regulate the sale of securities on national exchanges 
  • C. provide for disclosure of information about new securities offerings 
  • D. provide for disclosure of the financial condition of underwriters 
Answer: C
Explanation: 
provide for disclosure of information about new securities offerings. The 1933 act is primarily concerned with registration and disclosures relating to new securities. 

Question #2

A mutual fund with an 8% load and a 1% redemption fee carries a current quote of $6.25 - $6.79. If an investor has tendered his shares for redemption on that basis, the per shareprice he will receive is approximately:

  • A. $6.79 
  • B. $6.72 
  • C. $6.25 
  • D. $6.19 
Answer: D
Explanation: 
$6.19. The fund has a redemption fee of 1%. This is about 6 cents based upon the bid price. Subtracting that from the $6.25 bid results in $6.19.

Question #3

How much currency is one mil worth?

  • A. one-tenth of one cent 
  • B. one-tenth of $1 
  • C. one-tenth of $100 
  • D. one-tenth of $1,000 
Answer: B
Explanation: 
one-tenth of one cent. A point equals $10 and a basis point equals ten cents.

Question #4

In the sale of open-end investment company shares, the amount at which the sales charge is reduced on quantity transactions is referred to as the:

  • A. margin 
  • B. breakpoint 
  • C. split 
  • D. spread 
Answer: B
Explanation: 
breakpoint. This is the dollar value at which the sales charge is reduced.

Question #5

At the time it underlying stock is trading at 48, Bubba buys a listed call option with a $50 strike price for $300. At what minimum price must that stock trade for Bubba to recover hisinvestment (ignoring commission and taxes)?

  • A. $45 
  • B. $48 
  • C. $51 
  • D. $53 
Answer: D
Explanation: 
$53. The breakeven price on the call is the premium plus the strike price. Since the premium is $3 per share, the breakeven price is $53.



Question #6

Bubba Corporation has 3,500,000 shares of common stock outstanding and its trading volume in the few weeks has been as follows: Week 1 - 43,000 Week 2 - 30,900 Week 3 - 37,500Week 4 - 42,600 Week 5 - 33,000 (the most recent week)If an affiliated person wanted to liquidate some of his holding of 100,000 shares pursuant to SEC Rule 144, how many shares could he sell?

  • A. 35,000 
  • B. 36,000 
  • C. 37,400 
  • D. 38,500 
Answer: B
Explanation: 
36,000. Under Rule 144 up to one percent of the outstanding shares or the average weekly volume for the preceding four weeks, whichever is greater. The total volume for the last four seeks was 144,000 shares. The average is therefore 36,000 shares. This is greater than one percent of the shares outstanding (35,000).

Question #7

Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital. How many rights does Bubba receive?

  • A. 20 
  • B. 50 
  • C. 100 
  • D. 200 
Answer: D
Explanation: 
200. In an issue of rights, there is always one right per share. Bubba owns 200 shares and thus receives the same number of rights.

Question #8

Call loans made by banks to broker/dealers are generally for the purpose of which of the following?

  • A. expansion of office facilities 
  • B. meeting operating expenses 
  • C. carrying margin accounts 
  • D. financing securities held in inventory 
Answer: C
Explanation: 
carrying margin accounts. A call loan is made to brokers who use securities as collateral. They are usually made to finance the debit balances in margin accounts. 

Question #9

A stock with a current P/E of 17 is selling at $74.50 per share. What are the company’s earnings in the trailing 12 months?

  • A. about $4.28 
  • B. $6.20 
  • C. $1.70 
  • D. impossible to calculate from this information 
Answer: A
Explanation: 
about $4.28. Divide the market price by the P/E.

Question #10

To accommodate a customer’s order to buy an over-the-counter stock, a broker/dealer is permitted to:

  • A. sell him shares from the firm’s inventory 
  • B. sell these shares short to the customer 
  • C. act as agent on this transaction 
  • D. all of the above 
Answer: D
Explanation: 
all of the above. All of the choices are normal ways for the broker to fill the customer’s order.
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