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Opens & Maintains Customer Accounts: 96 free Series 7 practice questions

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  1. Under FINRA Rule 2111, which of the following is NOT one of the three suitability obligations a registered representative must satisfy?easy
  2. Which of the following information is required to be collected under Know Your Customer (KYC) rules when opening a new account?easy
  3. A customer states that her primary goal is to protect her principal while generating modest income. Which investment objective best…easy
  4. A 72-year-old retired widow with limited savings and a conservative risk tolerance asks her broker to invest her entire portfolio in…medium
  5. Reasonable-basis suitability requires that a registered representative:medium
  6. A registered representative executes 47 trades in a customer's account over a two-month period, generating $12,000 in commissions on a…medium
  7. Which of the following factors is LEAST relevant when assessing a customer's risk tolerance?easy
  8. A long-standing customer informs her representative that she has just retired and wants to change her investment objectives from growth to…medium
  9. In a Joint Tenants with Right of Survivorship (JTWROS) account, what happens to the assets when one account holder dies?easy
  10. Which of the following is a key characteristic of a Tenants in Common (TIC) account?easy
  11. Under the Uniform Gifts to Minors Act (UGMA), who has the authority to make investment decisions for the account?easy
  12. Which of the following statements about UGMA/UTMA custodial accounts is TRUE?medium
  13. What is the primary advantage of a UTMA account over a UGMA account?medium
  14. A registered representative receives an order from the trustee of a trust account to purchase speculative penny stocks. The trust document…medium
  15. When opening a corporate brokerage account, which document is required to identify the individuals authorized to trade on behalf of the…medium
  16. A limited partnership wishes to open a brokerage account. Which of the following is TRUE regarding the authority to trade in the account?medium
  17. An executor of an estate account contacts a registered representative to liquidate all positions and distribute cash to the beneficiaries.…hard
  18. In an individual brokerage account, who is authorized to make trading decisions?easy
  19. In a JTWROS account with two owners, which of the following is TRUE regarding placing orders?medium
  20. What is the primary tax advantage of contributing to a Traditional IRA?easy
  21. Which of the following best describes the tax treatment of a Roth IRA?easy
  22. Which of the following retirement accounts is NOT subject to required minimum distributions (RMDs) during the account owner's lifetime?medium
  23. A Simplified Employee Pension (SEP) IRA is most commonly used by:easy
  24. Which of the following is a requirement for an employer to establish a SIMPLE IRA plan?medium
  25. Which of the following is a key feature of a 401(k) retirement plan?easy
  26. A 403(b) plan is available to employees of which type of organization?medium
  27. A client wants to move funds from her employer's 401(k) to a Traditional IRA after leaving her job. To avoid immediate tax consequences and…medium
  28. A 45-year-old client withdraws $20,000 from her Traditional IRA to pay for a vacation. What are the tax consequences?medium
  29. A 55-year-old client with a high current income but expecting significantly lower income in retirement is considering converting her…hard
  30. A client turned 73 this year and has a Traditional IRA worth $500,000. She has not yet taken any distributions. What is the consequence if…hard
  31. Which of the following is a requirement for making contributions to a Roth IRA?easy
  32. Which of the following pieces of information is typically required on a new account form?easy
  33. The Customer Identification Program (CIP) requires broker-dealers to verify the identity of customers opening new accounts. What is the…easy
  34. Under the USA PATRIOT Act, broker-dealers are required to implement anti-money laundering (AML) programs. Which of the following is NOT…medium
  35. A registered representative notices that a customer has been making frequent large cash deposits just under $10,000, followed by immediate…medium
  36. When opening a new account, a broker-dealer must check the customer's name against the OFAC (Office of Foreign Assets Control) list. What…hard
  37. Who must approve the opening of a new customer account at a broker-dealer?easy
  38. Under SEC Rule 17a-4, how long must a broker-dealer retain new account documentation after an account is closed?medium
  39. Under the FinCEN Customer Due Diligence (CDD) Rule, when opening an account for a legal entity, a broker-dealer must identify and verify…hard
  40. Under Regulation T, what is the initial margin requirement for purchasing securities in a margin account?easy
  41. A customer buys $100,000 worth of stock in a margin account, depositing the required $50,000 initial margin. If FINRA's minimum maintenance…medium
  42. A client purchases 1,000 shares of XYZ stock at $80 per share in a margin account, depositing the Reg T required initial margin. The stock…hard
  43. Which of the following securities is generally NOT eligible to be purchased on margin?medium
  44. Which of the following documents must a customer sign to open a margin account?easy
  45. Before a customer can begin trading options, which of the following must occur?medium
  46. A customer with moderate income, limited net worth, and no prior options experience applies to trade uncovered (naked) call options. What…hard
  47. For a registered representative to exercise discretion over a customer's account, which of the following is required?easy
  48. A customer calls her representative and says, 'Buy me 200 shares of some tech stock you think is good.' If the representative selects the…medium
  49. A customer instructs his representative: 'Buy 500 shares of Microsoft whenever you think the price is right today.' The representative does…hard
  50. What is the difference between a limited power of attorney and a full power of attorney over a brokerage account?medium
  51. Which of the following is an example of a fiduciary account?medium
  52. Under the Prudent Investor Rule, a fiduciary managing a trust portfolio is expected to:hard
  53. Under SEC Regulation Best Interest (Reg BI), which of the following obligations does a broker-dealer owe to a retail customer when making a…hard
  54. A customer walks into a brokerage office and deposits $15,000 in cash to fund a new account. What reporting obligation does this trigger?hard
  55. A customer wants to sell short 500 shares of ABC stock currently trading at $60 per share in a margin account. What is the minimum initial…hard
  56. When opening a new account for a 28-year-old customer earning $60,000, which information is required under FINRA's Know Your Customer…easy
  57. When opening a new account for a 29-year-old customer earning $85,000, which information is required under FINRA's Know Your Customer…easy
  58. When opening a new account for a 30-year-old customer earning $110,000, which information is required under FINRA's Know Your Customer…easy
  59. When opening a new account for a 31-year-old customer earning $135,000, which information is required under FINRA's Know Your Customer…easy
  60. When opening a new account for a 32-year-old customer earning $160,000, which information is required under FINRA's Know Your Customer…easy
  61. When opening a new account for a 33-year-old customer earning $185,000, which information is required under FINRA's Know Your Customer…easy
  62. When opening a new account for a 34-year-old customer earning $210,000, which information is required under FINRA's Know Your Customer…easy
  63. When opening a new account for a 35-year-old customer earning $235,000, which information is required under FINRA's Know Your Customer…easy
  64. When opening a new account for a 36-year-old customer earning $60,000, which information is required under FINRA's Know Your Customer…easy
  65. When opening a new account for a 37-year-old customer earning $85,000, which information is required under FINRA's Know Your Customer…easy
  66. When opening a new account for a 38-year-old customer earning $110,000, which information is required under FINRA's Know Your Customer…easy
  67. When opening a new account for a 39-year-old customer earning $135,000, which information is required under FINRA's Know Your Customer…easy
  68. When opening a new account for a 40-year-old customer earning $160,000, which information is required under FINRA's Know Your Customer…easy
  69. When opening a new account for a 41-year-old customer earning $185,000, which information is required under FINRA's Know Your Customer…easy
  70. When opening a new account for a 42-year-old customer earning $210,000, which information is required under FINRA's Know Your Customer…easy
  71. When opening a new account for a 43-year-old customer earning $235,000, which information is required under FINRA's Know Your Customer…easy
  72. When opening a new account for a 44-year-old customer earning $60,000, which information is required under FINRA's Know Your Customer…easy
  73. When opening a new account for a 45-year-old customer earning $85,000, which information is required under FINRA's Know Your Customer…easy
  74. When opening a new account for a 46-year-old customer earning $110,000, which information is required under FINRA's Know Your Customer…easy
  75. When opening a new account for a 47-year-old customer earning $135,000, which information is required under FINRA's Know Your Customer…easy
  76. When opening a new account for a 48-year-old customer earning $160,000, which information is required under FINRA's Know Your Customer…easy
  77. When opening a new account for a 49-year-old customer earning $185,000, which information is required under FINRA's Know Your Customer…easy
  78. When opening a new account for a 50-year-old customer earning $210,000, which information is required under FINRA's Know Your Customer…easy
  79. When opening a new account for a 51-year-old customer earning $235,000, which information is required under FINRA's Know Your Customer…easy
  80. When opening a new account for a 52-year-old customer earning $60,000, which information is required under FINRA's Know Your Customer…easy
  81. When opening a new account for a 53-year-old customer earning $85,000, which information is required under FINRA's Know Your Customer…easy
  82. When opening a new account for a 54-year-old customer earning $110,000, which information is required under FINRA's Know Your Customer…easy
  83. When opening a new account for a 55-year-old customer earning $135,000, which information is required under FINRA's Know Your Customer…easy
  84. Which statement best describes joint tenants with rights of survivorship registration?easy
  85. Which statement best describes tenants in common registration?easy
  86. Which statement best describes community property registration?easy
  87. Which statement best describes transfer on death registration registration?easy
  88. A customer asks a representative to exercise time and price discretion only for the current business day without written authorization.…medium
  89. A customer asks a representative to accept a written discretionary trading authorization. What is the best response?medium
  90. A customer asks a representative to request a trusted contact person on a retail account application. What is the best response?medium
  91. A customer asks a representative to suspect financial exploitation of a senior investor. What is the best response?medium
  92. Before a margin account may be opened, the firm must obtain the customer’s signed margin agreement promptly after account approval?medium
  93. A customer who buys securities in a cash account is expected to pay by settlement date to avoid freeriding issues?medium
  94. If a customer refuses to provide a taxpayer identification number on the new account form, the likely consequence is?medium
  95. When a customer changes address or employment information, the representative should?medium
  96. If a representative becomes aware that a customer is a control person or affiliate of a public company, the firm should?hard
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