🏦LTB
← All Series 7 questions
 Series 7 topic

Investment Information & Recommendations: 471 free Series 7 practice questions

Every question links to a full page with the answer and explanation. When you can answer these cold, drill them under time pressure in the free practice app.

Drill Series 7 freeSeries 7 exam guide
  1. Which of the following rights is most commonly associated with common stockholders?easy
  2. A corporation's board of directors declares a cash dividend of $0.50 per share. On which date does the stock begin trading without the…easy
  3. An investor owns 200 shares of XYZ Corp at $60 per share. After a 3-for-1 stock split, what will the investor hold?easy
  4. A company trading at $2 per share announces a 1-for-10 reverse stock split. An investor who owns 1,000 shares will now hold:medium
  5. Preemptive rights allow existing shareholders to:easy
  6. Under cumulative voting, a shareholder who owns 300 shares and is voting on 4 board seats may cast how many total votes?medium
  7. A company has $4 cumulative preferred stock outstanding and has not paid dividends for 2 years. Before common stockholders can receive any…medium
  8. Which type of preferred stock allows the holder to receive dividends in excess of the stated rate if the company's earnings exceed a…hard
  9. An investor holds 100 shares of $50 par convertible preferred stock, convertible at $25 per common share. How many common shares will the…medium
  10. Which statement is TRUE about callable preferred stock?easy
  11. A company announces a rights offering to existing shareholders. The subscription price is set at $40, and the stock is currently trading at…medium
  12. Which of the following statements BEST distinguishes warrants from rights?medium
  13. American Depositary Receipts (ADRs) represent:easy
  14. An investor holding ADRs of a Japanese company is most exposed to which additional risk compared to holding domestic stocks?medium
  15. Under SEC Rule 144, restricted securities acquired from an issuer in a private placement must be held for a minimum of how long before they…hard
  16. A corporate affiliate (insider) who owns 500,000 shares of publicly traded stock wishes to sell shares under Rule 144. The average weekly…hard
  17. Under statutory (regular) voting, a shareholder with 500 shares voting on 3 board seats can cast:easy
  18. An investor owns 400 shares of stock at a cost basis of $50 per share. The company declares a 10% stock dividend. After the dividend, what…medium
  19. In the event of a corporate liquidation, which of the following has the LAST claim on assets?easy
  20. A company has 10 million shares outstanding and issues rights allowing shareholders to buy 1 new share for every 5 shares held at $30. The…hard
  21. When market interest rates rise, the market price of preferred stock will most likely:medium
  22. Dividends paid on ADRs are typically:medium
  23. An affiliate selling restricted stock under Rule 144 must file Form 144 with the SEC if the sale exceeds which threshold?hard
  24. An investor purchases warrants with an exercise price of $35 per share. The warrants were issued with a 5-year expiration. The current…hard
  25. ABC stock closes at $50 per share and pays a $1 quarterly dividend. The stock goes ex-dividend the next morning. At what price would you…medium
  26. A convertible preferred stock has a par value of $100 and is convertible into 4 shares of common stock. If the common stock is trading at…hard
  27. Which type of preferred stock would exhibit the LEAST price volatility in response to interest rate changes?medium
  28. A non-affiliate investor acquired restricted stock from an issuer that files reports with the SEC. After holding the stock for one year,…hard
  29. What is a key difference between sponsored and unsponsored ADRs?medium
  30. Which of the following corporate actions requires shareholder approval?easy
  31. An investor holds 200 shares of $100 par, 5% cumulative convertible preferred stock, convertible at $25. The common stock is trading at…hard
  32. Warrants are most commonly issued:medium
  33. Why would a company most likely perform a reverse stock split?easy
  34. Stock rights typically expire within:easy
  35. An investor purchases 500 shares of DEF stock on Monday. The ex-dividend date is Wednesday of the same week. Settlement for equities is…medium
  36. If a company misses a dividend payment on noncumulative preferred stock, which of the following is TRUE?medium
  37. Which of the following statements is TRUE regarding control securities under Rule 144?hard
  38. A company has total assets of $50 million, total liabilities of $30 million, and preferred stock with a par value of $5 million. If there…medium
  39. An investor is deciding between Company A with a P/E ratio of 35 and Company B with a P/E ratio of 12, both in the same industry. Which…hard
  40. Which type of corporate bond is backed by specific assets of the issuing corporation?easy
  41. A debenture is best described as:easy
  42. A convertible bond has a par value of $1,000 and is convertible into common stock at a conversion price of $40. If the common stock is…medium
  43. An issuer is MOST likely to call its outstanding bonds when:easy
  44. A zero-coupon bond is purchased at $600 and matures at $1,000 in 10 years. Which of the following is TRUE?medium
  45. A corporate bond with a 6% coupon rate is trading at $900. What is the current yield?medium
  46. Which of the following yield measures takes into account the coupon payments, the purchase price, the time to maturity, and the difference…hard
  47. A callable bond with a 7% coupon is purchased at $1,050. The bond is callable in 5 years at $1,020. Compared to the yield to maturity…hard
  48. When market interest rates increase, the market price of existing bonds will:easy
  49. A bond trading at 103 is said to be trading at:easy
  50. General obligation (GO) bonds are backed by:easy
  51. Revenue bonds are repaid from:easy
  52. An investor in the 32% federal tax bracket is considering a municipal bond yielding 4%. What is the taxable equivalent yield?medium
  53. Industrial development revenue bonds (IDRBs) are issued by municipalities to:medium
  54. What distinguishes a moral obligation bond from other municipal bonds?hard
  55. A double-barreled municipal bond is one that is backed by:medium
  56. Special assessment bonds are repaid by:medium
  57. Treasury bills (T-bills) differ from Treasury notes and bonds in that T-bills:easy
  58. Treasury notes have original maturities of:easy
  59. Which of the following is TRUE about US Treasury bonds?easy
  60. Treasury Inflation-Protected Securities (TIPS) protect investors against inflation by adjusting:medium
  61. STRIPS (Separate Trading of Registered Interest and Principal of Securities) are best described as:medium
  62. Which US government agency's mortgage-backed securities carry the full faith and credit guarantee of the US government?medium
  63. The Federal National Mortgage Association (Fannie Mae) primarily:easy
  64. Which of the following is TRUE about Federal Home Loan Mortgage Corporation (Freddie Mac) securities?easy
  65. An investor purchases a 20-year, 5% corporate bond at $850. The bond is callable in 10 years at $1,020. Which yield measure should the…hard
  66. An investor in the 37% tax bracket earns $5,000 in interest from a municipal bond. How much federal income tax is owed on this interest?medium
  67. For a bond trading at a discount, which of the following correctly ranks the yield measures from lowest to highest?medium
  68. An income bond (adjustment bond) pays interest:medium
  69. In the event of a corporate liquidation, subordinated debentures are paid:easy
  70. Which of the following protective covenants would most likely be found in a revenue bond indenture?hard
  71. An investor purchases a TIPS with a par value of $1,000 and a 2% coupon rate. After one year, the CPI has increased by 3%. What is the…hard
  72. When analyzing a general obligation bond, which factor is MOST important?medium
  73. Which of the following bonds would have the GREATEST price sensitivity to a change in interest rates?hard
  74. An investor holds a convertible bond ($1,000 par, 4% coupon) convertible into 20 shares of stock. The stock is trading at $55, and the bond…hard
  75. Which type of municipal bond interest may be subject to the Alternative Minimum Tax (AMT)?medium
  76. Interest on GNMA, FNMA, and FHLMC securities is:medium
  77. When purchasing a bond in the secondary market between coupon payment dates, the buyer must pay the seller:medium
  78. A sinking fund provision in a bond indenture requires the issuer to:easy
  79. General obligation bonds are typically sold through which underwriting method?medium
  80. In a Treasury auction, noncompetitive bidders:medium
  81. A bond with an 8% coupon rate is trading at par ($1,000). What is the current yield?easy
  82. A municipality issues new bonds at a lower interest rate and uses the proceeds to retire outstanding higher-rate bonds. This process is…hard
  83. How is the annual increase in value of a STRIPS (zero-coupon Treasury) treated for tax purposes?hard
  84. An investor in the 24% tax bracket is comparing a 3.5% municipal bond with a 4.5% corporate bond. Which provides the better after-tax…medium
  85. An equipment trust certificate is a type of secured bond backed by:medium
  86. The disclosure document provided to investors in a new municipal bond offering is called:easy
  87. Two bonds have the same credit rating and maturity of 15 years. Bond A has a 3% coupon and Bond B has a 7% coupon. If interest rates rise…hard
  88. Under a net revenue pledge for a municipal revenue bond, debt service is paid from:hard
  89. US Series I Savings Bonds offer investors protection against:easy
  90. Commercial paper is best described as:easy
  91. A banker's acceptance is commonly used to:medium
  92. In a repurchase agreement (repo), the dealer:medium
  93. A reverse repurchase agreement, from the investor's perspective, is essentially:medium
  94. Negotiable certificates of deposit (CDs) differ from regular bank CDs in that negotiable CDs:easy
  95. The federal funds rate is the interest rate at which:easy
  96. In a collateralized mortgage obligation (CMO), mortgage payments are divided into tranches. Which statement BEST describes how tranches…medium
  97. Planned Amortization Class (PAC) bonds within a CMO structure offer investors:hard
  98. A Z-tranche (accrual tranche) in a CMO is characterized by:hard
  99. Companion (support) tranches in a CMO structure:hard
  100. Prepayment risk for mortgage-backed securities is GREATEST when:medium
  101. Extension risk for a mortgage-backed security refers to the risk that:medium
  102. A collateralized debt obligation (CDO) differs from a CMO primarily because a CDO:hard
  103. Which of the following would most likely serve as collateral for an asset-backed security (ABS)?medium
  104. A GNMA pass-through security provides investors with:medium
  105. A corporation issues $10 million in commercial paper at a discount with a 90-day maturity. The paper is sold at 98.5% of face value. What…medium
  106. Which statement BEST distinguishes the federal funds rate from the discount rate?easy
  107. A conservative investor seeking predictable monthly income for the next 5 years should consider which CMO tranche?hard
  108. Which of the following is a form of internal credit enhancement used in asset-backed securities?hard
  109. An investor holds a GNMA pass-through security yielding 5.5%. Market interest rates drop to 3.5%. The investor faces the GREATEST risk from:medium
  110. A broker-dealer enters into a 7-day repurchase agreement, selling $5 million in Treasury bonds at 99.5% and agreeing to repurchase at 100%.…hard
  111. If interest rates decline, an interest-only (IO) strip from a CMO will most likely:hard
  112. A US importer needs to purchase goods from a German exporter. To facilitate this transaction, the importer's bank creates a banker's…medium
  113. In the securitization process, the entity that creates the asset-backed securities by purchasing the underlying assets from the originator…medium
  114. In a rising interest rate environment, which CMO tranche would be MOST negatively affected?hard
  115. An institutional investor purchases a $1 million negotiable CD with a 6-month maturity. After 3 months, the investor needs cash. What can…easy
  116. The weighted average life (WAL) of a mortgage-backed security is affected MOST by:medium
  117. In a CDO structure, which tranche bears the first losses from defaults in the underlying collateral pool?hard
  118. A credit card asset-backed security enters its 'amortization period.' This means:medium
  119. An investor seeking the SAFEST short-term investment with maximum liquidity should consider:easy
  120. A call option gives the holder the right to do which of the following?easy
  121. A put option gives the holder the right to do which of the following?easy
  122. Which of the following investors would benefit from a rise in the price of the underlying stock?easy
  123. What is the maximum loss for a buyer of a call option?easy
  124. What is the maximum gain for a buyer of a call option?easy
  125. What is the maximum loss for a writer of an uncovered (naked) call option?easy
  126. An investor who owns 100 shares of XYZ stock and writes one XYZ call option has established which position?easy
  127. What is the maximum loss for a buyer of a put option?easy
  128. What is the maximum gain for a buyer of a put option?easy
  129. An option's premium is made up of which two components?easy
  130. XYZ stock is trading at $53. An XYZ 50 call option has a premium of $5. What is the intrinsic value of this call?easy
  131. ABC stock is trading at $42. An ABC 45 call option would be considered:easy
  132. DEF stock is trading at $38. A DEF 40 put option would be considered:easy
  133. Before a customer can begin trading options, the registered representative must ensure which document is delivered?easy
  134. Who is ultimately responsible for approving a customer's options account?easy
  135. An investor who owns stock and buys a put option on that stock has established which strategy?easy
  136. An investor buys 1 XYZ Oct 60 call at $4. At expiration, XYZ stock is trading at $68. What is the investor's profit?medium
  137. An investor buys 1 ABC Jan 45 call at $3. At expiration, ABC is trading at $43. What is the investor's gain or loss?medium
  138. An investor buys 1 DEF Apr 70 call at $5. What is the breakeven point?medium
  139. An investor buys 1 GHI Jul 50 put at $4. What is the breakeven point?medium
  140. An investor buys 1 MNO Oct 35 put at $2. At expiration, MNO is trading at $29. What is the investor's profit?medium
  141. An investor buys 100 shares of RST at $50 and writes 1 RST Jul 55 call at $3. What is the maximum profit on this covered call position?medium
  142. An investor buys 100 shares of ABC at $62 and writes 1 ABC Sep 65 call at $4. What is the breakeven point on this position?medium
  143. An investor owns 100 shares of QRS purchased at $75 and buys 1 QRS Dec 70 put at $3. What is the maximum loss on this combined position?medium
  144. LMN stock is trading at $47. An LMN 50 put has a premium of $5. What is the intrinsic value and time value of this put?medium
  145. What is the maximum loss for a writer of an uncovered put option with a strike price of $60 and a premium of $4?medium
  146. An investor writes 1 XYZ Mar 40 put at $3. At expiration, XYZ is at $35. What is the investor's gain or loss?medium
  147. An investor establishes a bull call spread by buying 1 ABC Jun 40 call at $5 and writing 1 ABC Jun 50 call at $2. What is the maximum…medium
  148. An investor establishes a bull call spread by buying 1 DEF Oct 30 call at $4 and writing 1 DEF Oct 35 call at $1. What is the maximum loss?medium
  149. An investor establishes a bear put spread by buying 1 GHI Nov 55 put at $6 and writing 1 GHI Nov 45 put at $2. What is the maximum profit?medium
  150. An investor establishes a bear call spread by writing 1 JKL Dec 50 call at $5 and buying 1 JKL Dec 60 call at $2. What is the maximum gain?medium
  151. An investor writes 1 MNO Sep 40 call at $6 and buys 1 MNO Sep 50 call at $2 (bear call spread). What is the maximum loss?medium
  152. An investor buys 1 PQR Aug 50 call at $4 and buys 1 PQR Aug 50 put at $3 (long straddle). What are the breakeven points?medium
  153. Which market outlook is most appropriate for an investor who purchases a long straddle?medium
  154. An investor writes 1 STU May 45 call at $3 and writes 1 STU May 45 put at $2 (short straddle). What is the maximum gain?medium
  155. What is the maximum loss for a short straddle writer?medium
  156. LEAPS (Long-Term Equity AnticiPation Securities) differ from standard listed options primarily in that they:easy
  157. Index options are settled in which of the following ways?easy
  158. Broad-based index options such as the S&P 500 Index (SPX) use which exercise style?medium
  159. When an option holder exercises the option, the OCC assigns the exercise notice to:easy
  160. An investor owns 100 shares of XYZ at $50, buys 1 XYZ 45 put at $2, and writes 1 XYZ 55 call at $2. This strategy is known as a:medium
  161. An investor owns 100 shares of DEF at $80, buys 1 DEF 75 put at $3, and writes 1 DEF 85 call at $3. What is the maximum profit and maximum…hard
  162. An investor buys 1 ABC Aug 40 put at $2 and buys 1 ABC Aug 50 call at $3 (long strangle). What are the breakeven points?medium
  163. Compared to a long straddle, a long strangle has which of the following characteristics?medium
  164. An investor writes 1 QRS Mar 60 put at $7 and buys 1 QRS Mar 50 put at $2 (bull put spread). What is the maximum profit, maximum loss, and…hard
  165. An investor buys 1 XYZ Jul 40 call and writes 1 XYZ Jul 50 call. This is which type of spread?medium
  166. As an option approaches expiration, what happens to its time value?easy
  167. What is the maximum gain for a writer of a call option?easy
  168. What is the maximum gain for a writer of a put option?easy
  169. An investor buys 100 shares of TUV at $40 and writes 1 TUV Jun 45 call at $3. What is the maximum loss?medium
  170. An investor buys 1 ABC Nov 60 call at $5 and buys 1 ABC Nov 60 put at $4 (long straddle). At expiration, ABC is at $72. What is the…hard
  171. An investor buys 1 DEF Oct 75 call at $6 and buys 1 DEF Oct 75 put at $5 (long straddle). At expiration, DEF is at $75. What is the…hard
  172. An investor writes 1 GHI Sep 50 call at $4 and writes 1 GHI Sep 50 put at $3. At expiration, GHI is at $42. What is the investor's gain or…hard
  173. When a listed equity option expires unexercised, the premium paid by the buyer is treated for tax purposes as:medium
  174. When a call option is exercised, how is the premium treated for tax purposes for the buyer?medium
  175. An investor who buys stock and simultaneously buys a protective put exercises the put. How is the premium treated?hard
  176. The Options Clearing Corporation (OCC) serves which primary function?easy
  177. Which options strategy typically requires the highest level of account approval?easy
  178. An investor buys 100 shares of JKL at $55 and buys 1 JKL Oct 50 put at $2. At expiration, JKL is at $62. What is the investor's profit?hard
  179. An investor buys 100 shares of MNO at $40 and buys 1 MNO Dec 35 put at $1.50. At expiration, MNO is at $28. What is the investor's loss?hard
  180. PQR stock trades at $82. A PQR 85 call has a premium of $4. What is the time value of this option?medium
  181. An investor buys 3 XYZ Apr 55 calls at $4 each. At expiration, XYZ is at $65. What is the total profit?hard
  182. An investor writes 1 uncovered ABC May 70 call at $5. At expiration, ABC is at $82. What is the investor's loss?hard
  183. An investor buys 1 DEF Aug 35 call at $6 and writes 1 DEF Aug 45 call at $2. At expiration, DEF is at $40. What is the profit or loss?hard
  184. An investor buys 1 GHI Dec 60 put at $7 and writes 1 GHI Dec 50 put at $3. At expiration, GHI is at $48. What is the profit?hard
  185. A debit spread is established when an investor:easy
  186. Which of the following is a credit spread?easy
  187. Standard listed equity options expire on which of the following?easy
  188. One standard equity option contract represents how many shares of the underlying stock?easy
  189. An investor buys 100 shares of RST at $48 and writes 1 RST Apr 50 call at $3. If the stock is called away at expiration, what is the total…medium
  190. A portfolio manager holds a large position in technology stocks and is concerned about a short-term market decline. Which strategy would…medium
  191. An investor writes 1 XYZ Sep 55 put at $4. The investor is obligated to do what if assigned?medium
  192. An investor buys 1 SPX 4200 call at $35 when the S&P 500 Index is at 4180. At expiration, the index is at 4260. What is the investor's…hard
  193. An investor who is long-term bullish on a stock but wants to limit capital outlay might consider which strategy?medium
  194. Under which circumstance would early exercise of an American-style call option most likely occur?medium
  195. Options on exchange-traded funds (ETFs) are settled by:easy
  196. Position limits for options apply to the number of contracts an investor can hold on:easy
  197. An investor who previously bought a call option can close the position before expiration by:easy
  198. An investor buys 1 ABC Jun 65 put at $8 and writes 1 ABC Jun 55 put at $3. What is the breakeven point?hard
  199. An investor buys 1 XYZ Nov 45 put at $2 and buys 1 XYZ Nov 55 call at $3 (long strangle). At expiration, XYZ is at $61. What is the profit…hard
  200. A retired investor with a large stock portfolio seeking income and willing to sell stock at a higher price would be best suited for which…medium
  201. Which of the following represents a bearish options strategy?medium
  202. Within how many days of account approval must a customer return the signed options agreement?easy
  203. An investor holds 1 ABC Oct 80 call. ABC announces a 2-for-1 stock split. After the split, the investor will hold:medium
  204. An investor holds 1 XYZ Jul 90 call. XYZ announces a 3-for-2 stock split. After the adjustment, the investor will hold:hard
  205. An investor buys 1 RST Mar 80 call at $6.50. At which stock price will the investor break even at expiration?medium
  206. An investor buys 2 DEF Jun 40 puts at $3 each. At expiration, DEF is at $31. What is the total profit?hard
  207. An investor owns 500 shares of GHI at $30 and writes 5 GHI Aug 35 calls at $2 each. If all options expire worthless, what is the income…medium
  208. An investor bought 1 JKL Oct 50 call at $4. Two months later, with JKL at $58, the call is trading at $9. If the investor sells the call,…medium
  209. An investor buys 100 shares at $70, buys 1 put with a $65 strike at $3, and writes 1 call with a $80 strike at $4. At expiration, the stock…hard
  210. Using the same collar from the previous scenario (stock at $70, 65 put at $3, 80 call at $4), if the stock drops to $50 at expiration, what…hard
  211. An investor has $6,000 to invest. XYZ stock is at $60, and the XYZ Jan 60 call trades at $6. If XYZ rises to $72, what is the percentage…medium
  212. An investor writes 1 ABC Sep 50 put at $6 and buys 1 ABC Sep 40 put at $1 (bull put spread). At expiration, ABC is at $46. What is the gain…hard
  213. An investor buys 1 XYZ 50 call and writes 1 XYZ 50 put with the same expiration. This synthetic position is equivalent to:hard
  214. An increase in implied volatility of the underlying stock would have what effect on option premiums?medium
  215. All else being equal, rising interest rates tend to have what effect on option premiums?medium
  216. An investor writes 1 uncovered MNO Nov 45 call at $4. What is the breakeven point?medium
  217. An investor writes 1 uncovered PQR Dec 30 put at $2.50. What is the breakeven point?medium
  218. An investor writes 5 covered ABC Jul 50 calls at $3 each. The stock was purchased at $47. At expiration, ABC is at $55 and all calls are…hard
  219. An investor who writes a deep in-the-money covered call on stock held for 10 months may face which tax consequence?hard
  220. The OCC's exercise-by-exception rule automatically exercises options that expire in-the-money by at least:easy
  221. An investor buys a put with a higher strike price and writes a put with a lower strike price, both with the same expiration. This is a:easy
  222. What is the maximum loss for a long straddle?medium
  223. An investor buys 1 RST Feb 40 call at $3 and buys 1 RST Feb 35 put at $2. At expiration, RST is at $30. What is the gain or loss?hard
  224. What is the primary difference between a covered call and an uncovered call?easy
  225. Which of the following options positions requires a margin account?medium
  226. Which two options positions are on the same side of the market (bearish)?medium
  227. An investor holds 1 OEX (S&P 100) 2100 call. At expiration, the index closes at 2135. What cash settlement does the investor receive?hard
  228. An investor buys 100 shares of XYZ at $45 and writes 1 XYZ Jun 50 call at $3. XYZ rises to $60 at expiration. What is the opportunity cost…medium
  229. An investor writes 1 ABC Jul 40 put at $3. If assigned, what is the effective purchase price of the stock?medium
  230. An investor buys 1 XYZ Oct 50 call and writes 1 XYZ Jul 50 call. This is an example of a:medium
  231. A vertical spread involves options with the same underlying and expiration but different:easy
  232. A diagonal spread combines elements of which two types of spreads?hard
  233. An investor writes 1 DEF Aug 55 call at $7 and buys 1 DEF Aug 65 call at $2. What is the breakeven point?hard
  234. Compared to a covered call strategy, a protective put strategy provides:medium
  235. An investor writes 1 JKL Mar 40 call at $3 and writes 1 JKL Mar 40 put at $2. What are the breakeven points?hard
  236. Which statement is TRUE regarding LEAPS options?easy
  237. An investor buys 1 RST May 25 call at $5 and writes 1 RST May 35 call at $2. If RST closes at $32 at expiration, what is the profit?hard
  238. When an option expires unexercised, the writer recognizes the premium as:hard
  239. An investor buys 100 shares of XYZ at $50, writes 1 XYZ Jun 55 call at $3, and buys 1 XYZ Jun 45 put at $2. If XYZ drops to $38 at…hard
  240. What is the primary difference between an open-end mutual fund and a closed-end fund?easy
  241. How is a mutual fund's net asset value (NAV) calculated?easy
  242. A mutual fund has total assets of $500 million, total liabilities of $10 million, and 20 million shares outstanding. What is the NAV per…medium
  243. Which share class of mutual fund typically charges a front-end sales load?easy
  244. A client invests $100,000 in Class A shares with a 5% front-end load. How much is actually invested in the fund?medium
  245. An investor qualifies for a breakpoint discount on mutual fund Class A shares. Which of the following would NOT count toward the breakpoint?medium
  246. Class B mutual fund shares are characterized by which of the following?easy
  247. What is the maximum sales charge permitted under FINRA rules for mutual fund purchases?medium
  248. 12b-1 fees are used to cover which of the following?easy
  249. A client wants to invest $50,000 in the ABC Growth Fund (Class A). The breakpoint schedule shows: under $25,000 = 5.75% load;…hard
  250. A registered representative recommends that a client invest $48,000 in a mutual fund when the next breakpoint is at $50,000. This practice…medium
  251. An investor who signs a letter of intent (LOI) for mutual fund purchases has how long to fulfill the commitment?easy
  252. Which feature allows a mutual fund investor to move money between funds within the same fund family at NAV without paying a new sales…medium
  253. A client owns Class C shares purchased 8 months ago. If the fund charges a 1% CDSC for redemptions within 12 months, and the shares have a…hard
  254. Unlike mutual funds, exchange-traded funds (ETFs) can be:easy
  255. The creation and redemption mechanism for ETFs involves which type of market participant?medium
  256. An ETF's tracking error refers to:medium
  257. Compared to actively managed mutual funds, most ETFs have:easy
  258. A unit investment trust (UIT) differs from a mutual fund primarily because a UIT:easy
  259. Which of the following is TRUE about unit investment trusts?medium
  260. During the accumulation phase of a variable annuity, earnings grow:easy
  261. A client invested $80,000 in a variable annuity that is now worth $120,000. If the client withdraws $30,000, how much is taxable?medium
  262. The death benefit in a variable annuity typically guarantees that beneficiaries will receive:medium
  263. A client who purchased a variable annuity 3 years ago wants to surrender the contract. The surrender charge schedule is: Year 1 = 7%, Year…hard
  264. A 1035 exchange allows an annuity owner to:medium
  265. A 58-year-old client invested $100,000 in a variable annuity that is now worth $75,000. If the client surrenders the contract (no surrender…hard
  266. During the annuitization phase, a variable annuity's payments are determined by:medium
  267. A variable annuity has an assumed interest rate (AIR) of 4%. If the separate account earned 6% in the first month and 4% in the second…hard
  268. Variable life insurance differs from whole life insurance primarily because:easy
  269. In a variable universal life (VUL) policy, which of the following is TRUE?medium
  270. A variable life insurance policy guarantees a minimum death benefit. If the separate account performs poorly, what happens to the death…hard
  271. A client is considering investing $200,000 for 15 years. Which mutual fund share class would likely result in the lowest total cost?hard
  272. A mutual fund charges a redemption fee of 2% on shares held less than 90 days. An investor purchased 1,000 shares at $20 per share 60 days…medium
  273. An inverse ETF is designed to deliver -1x the daily return of its benchmark. If the S&P 500 falls 2% on Monday and rises 2% on Tuesday, the…hard
  274. Variable annuity separate accounts are regulated as:easy
  275. A Real Estate Investment Trust (REIT) must distribute what minimum percentage of its taxable income to shareholders to maintain its…easy
  276. An equity REIT primarily generates income from:easy
  277. Which type of REIT is most sensitive to interest rate changes?medium
  278. A client is considering a non-traded REIT. Which of the following risks is MOST specific to non-traded REITs compared to publicly traded…hard
  279. A hybrid REIT combines which two investment strategies?medium
  280. In a direct participation program (DPP), losses flow through to:easy
  281. Under the at-risk rules for DPPs, a limited partner's deductible losses are limited to:medium
  282. Passive income from a limited partnership can be offset by:medium
  283. An investor contributes $50,000 to an oil and gas limited partnership and also signs a recourse note for $30,000. The partnership generates…hard
  284. Which type of DPP typically offers the greatest potential for depletion deductions?easy
  285. In a limited partnership, the general partner has:medium
  286. A real estate limited partnership allows investors to include their share of non-recourse debt in their at-risk amount. This exception…hard
  287. To invest in most hedge funds, an individual must qualify as an accredited investor, which requires a minimum net worth of:easy
  288. A hedge fund has a lock-up period of 2 years. This means:medium
  289. A hedge fund charges "2 and 20." This fee structure means:medium
  290. A hedge fund starts the year with $100 million in assets. The fund earns a 15% return and charges 2% management fee and 20% incentive fee.…hard
  291. Private placements are typically offered under which SEC regulation?easy
  292. Under Rule 506(b) of Regulation D, how many non-accredited investors may participate in a private placement?medium
  293. A key difference between Rule 506(b) and Rule 506(c) of Regulation D is that:medium
  294. An equipment leasing DPP provides tax benefits primarily through:easy
  295. A hedge fund using a long/short equity strategy buys $10 million in undervalued stocks and shorts $8 million in overvalued stocks. This…hard
  296. Private placement securities purchased under Regulation D are considered "restricted securities" because:hard
  297. REIT dividends are generally taxed to shareholders as:medium
  298. REITs that are publicly traded offer investors the advantage of:easy
  299. Which of the following is a characteristic unique to oil and gas exploratory (wildcat) programs?medium
  300. A security must be held for more than how long to qualify for long-term capital gains treatment?easy
  301. An investor bought 100 shares of XYZ stock at $40 per share and sold them 8 months later at $55 per share. The gain is classified as:easy
  302. An investor has a $10,000 net short-term capital loss and a $4,000 net long-term capital gain for the year. What is the tax treatment?medium
  303. An investor made the following purchases of ABC stock: 100 shares at $30 in January, 100 shares at $40 in March, and 100 shares at $50 in…medium
  304. An investor purchased 200 shares of DEF stock: 100 shares at $25 in February and 100 shares at $35 in May. The investor sells 100 shares at…medium
  305. The average cost basis method for determining capital gains is available for which type of security?easy
  306. The wash sale rule prevents an investor from claiming a loss if substantially identical securities are repurchased within:easy
  307. An investor sells 100 shares of GHI stock at a $2,000 loss on March 15. On March 30, the investor buys 100 shares of GHI. What is the tax…medium
  308. An investor buys 100 shares of JKL stock at $50 on January 10, sells them at $40 on February 15 (a $1,000 loss), and buys 100 new shares at…hard
  309. Which of the following is a tax preference item that could trigger the Alternative Minimum Tax (AMT)?medium
  310. A client in the 35% federal tax bracket holds $200,000 in private activity municipal bonds yielding 4%. If the AMT rate is 28%, what is the…hard
  311. Interest on municipal bonds is generally exempt from:easy
  312. A municipal bond purchased in the secondary market at a discount is subject to the de minimis rule. If a bond with a par value of $1,000…medium
  313. A municipal bond with a par value of $1,000 and 8 years to maturity is purchased at $985 in the secondary market. Under the de minimis…hard
  314. Qualified dividends are taxed at:easy
  315. An investor receives a $5,000 dividend from a domestic corporation. The investor purchased the stock 30 days before the ex-dividend date…medium
  316. An investor in the 32% federal tax bracket is comparing a municipal bond yielding 3.5% to a corporate bond. What is the tax-equivalent…medium
  317. An investor in the 37% federal tax bracket is considering a municipal bond yielding 4.00%. A comparable corporate bond yields 6.25%. Which…hard
  318. An investor sells stock for a $15,000 long-term capital gain and has a $5,000 short-term capital loss. What is the net result?medium
  319. An investor has the following results for the year: $8,000 short-term capital gain, $3,000 short-term capital loss, $2,000 long-term…hard
  320. When stock is received as a gift, the recipient's cost basis for determining a gain is generally:easy
  321. When securities are inherited from a deceased person, the beneficiary's cost basis is:medium
  322. A grandmother bought stock at $20 per share. She gifts it to her grandson when the fair market value is $15. The grandson later sells it at…hard
  323. An investor who is a resident of New York purchases a California municipal bond. The interest income is:medium
  324. Interest on U.S. Territory bonds (such as Puerto Rico, Guam, and the Virgin Islands) is:easy
  325. The tax-equivalent yield formula is:easy
  326. An investor in the 24% tax bracket earns 3.00% on a municipal bond. A corporate bond yields 4.25%. Which provides a better after-tax return?medium
  327. Net capital losses can be deducted against ordinary income up to a maximum of how much per year for an individual taxpayer?easy
  328. An investor sells 200 shares of MNO stock at a $4,000 loss on November 1. On October 15, the investor had purchased 100 shares of MNO. How…hard
  329. Which of the following municipal bond types would NOT create an AMT preference item?medium
  330. Dividends from which of the following would NOT qualify for the preferential qualified dividend tax rate?medium
  331. An original issue discount (OID) municipal bond is purchased at issuance for $900 with a par value of $1,000 and 10 years to maturity. How…hard
  332. An investor purchased 500 shares of a mutual fund over several years via automatic investment. The total invested was $15,000 for 500…hard
  333. A married couple filing jointly has $450,000 in taxable income and $50,000 in long-term capital gains. Their long-term capital gains are…medium
  334. An investor buys a municipal bond at a premium ($1,050 for a $1,000 par bond with 10 years to maturity). How must the premium be handled?medium
  335. A father purchased stock at $30 per share. He dies when the stock is worth $80. His daughter inherits the stock and sells it at $90. What…medium
  336. Which of the following transactions would trigger the wash sale rule for an investor who sold XYZ common stock at a loss?medium
  337. If no cost basis method is specified when selling securities, the IRS default method is:easy
  338. The Alternative Minimum Tax (AMT) was designed to ensure that:easy
  339. An investor buys 300 shares of QRS stock at $50 on June 1, 2025. On May 15, 2026, the investor sells 100 shares at $70. On June 5, 2026,…hard
  340. Under Regulation T, the initial margin requirement for purchasing securities on margin is:easy
  341. In a long margin account, equity is calculated as:easy
  342. A client purchases $80,000 of stock on margin, depositing the Reg T requirement. What is the debit balance in the account?medium
  343. A client bought $100,000 of stock on margin with a $50,000 debit balance. The stock drops to $80,000. What is the equity percentage?medium
  344. A long margin account has a market value of $60,000 and a debit balance of $35,000. What is the SMA (Special Memorandum Account) balance?hard
  345. The minimum maintenance margin requirement for long positions, as set by FINRA, is:easy
  346. A long margin account has a debit balance of $40,000. At what market value will the client receive a maintenance margin call (assuming the…hard
  347. A client has a long margin position worth $40,000 with a debit balance of $32,000. The maintenance requirement is 25%. How much must the…hard
  348. In a short margin account, equity is calculated as:easy
  349. A client sells short 1,000 shares at $30 per share, depositing the Reg T requirement. What is the credit balance?medium
  350. A client has a short position with a credit balance of $90,000. The current market value of the short position is $70,000. The maintenance…hard
  351. The minimum maintenance margin requirement for short positions is:medium
  352. A short margin account has a credit balance of $75,000. At what market value of the short position will a maintenance margin call be…hard
  353. Under Regulation T, a margin call must be met within how many business days?medium
  354. SMA (Special Memorandum Account) in a long margin account increases when:medium
  355. A long margin account has a market value of $120,000 and a debit balance of $50,000. How much SMA is available, and what is the buying…hard
  356. A long margin account is considered "restricted" when:medium
  357. A restricted long margin account has a market value of $60,000 and a debit balance of $40,000. If the client sells $10,000 worth of…hard
  358. A pattern day trader is defined as someone who executes how many or more day trades within 5 business days?easy
  359. A pattern day trader must maintain a minimum equity of:medium
  360. A client purchases 2,000 shares of XYZ at $25 per share on margin. The stock rises to $35. How much can the client withdraw from the…hard
  361. If a client fails to meet a maintenance margin call, the broker-dealer may:medium
  362. Which of the following securities CANNOT be purchased on margin?easy
  363. A client shorts 500 shares at $40. The stock rises to $50. With a 30% maintenance requirement on short positions, what is the margin call…hard
  364. A scenario: An investor deposits $30,000 cash into a new margin account. Under Regulation T, what is the maximum total market value of…medium
  365. A holder of common stock would normally expect which right?easy
  366. Which statement about preferred stock is TRUE?easy
  367. An ADR is most useful to a U.S. investor because it:easy
  368. A REIT is generally required to distribute most of its taxable income to shareholders to maintain favorable tax treatment. This means REITs…easy
  369. A 2-for-1 stock split will ordinarily cause an investor’s share count to:easy
  370. A 4% corporate bond quoted at 980 has a current yield closest to:easy
  371. Interest on Treasury securities is:easy
  372. Which municipal bond is backed primarily by the taxing power of the issuer?easy
  373. Which municipal bond is most likely to expose the investor to the alternative minimum tax?easy
  374. When market interest rates rise sharply, outstanding bond prices generally:easy
  375. A 4% corporate bond quoted at 1030 has a current yield closest to:easy
  376. An open-end investment company continuously offers:easy
  377. The public offering price of a mutual fund share equals:easy
  378. A closed-end fund is most similar to a common stock because it:easy
  379. ETF shares differ from mutual fund shares because ETFs:easy
  380. In a variable annuity, the separate account’s performance primarily affects:easy
  381. An investor buys 1 XYZ 40 call at 2. What is the breakeven point at expiration?medium
  382. An investor buys 1 XYZ 45 call at 3. What is the maximum possible loss?medium
  383. An investor writes 1 uncovered XYZ 50 call at 4. What is the maximum possible gain?medium
  384. An investor buys 1 XYZ 55 put at 5. What is the breakeven point at expiration?medium
  385. An investor writes 1 cash-secured XYZ 60 put at 6. What is the breakeven point at expiration?medium
  386. An investor buys 1 XYZ 65 call at 2. What is the breakeven point at expiration?medium
  387. An investor buys 1 XYZ 70 call at 3. What is the maximum possible loss?medium
  388. An investor writes 1 uncovered XYZ 75 call at 4. What is the maximum possible gain?medium
  389. An investor buys 1 XYZ 40 put at 5. What is the breakeven point at expiration?medium
  390. An investor writes 1 cash-secured XYZ 45 put at 6. What is the breakeven point at expiration?medium
  391. An investor buys 1 XYZ 50 call at 2. What is the breakeven point at expiration?medium
  392. An investor buys 1 XYZ 55 call at 3. What is the maximum possible loss?medium
  393. An investor writes 1 uncovered XYZ 60 call at 4. What is the maximum possible gain?medium
  394. An investor buys 1 XYZ 65 put at 5. What is the breakeven point at expiration?medium
  395. An investor writes 1 cash-secured XYZ 70 put at 6. What is the breakeven point at expiration?medium
  396. An investor buys 1 XYZ 75 call at 2. What is the breakeven point at expiration?medium
  397. An investor buys 1 XYZ 40 call at 3. What is the maximum possible loss?medium
  398. An investor writes 1 uncovered XYZ 45 call at 4. What is the maximum possible gain?medium
  399. An investor buys 1 XYZ 50 put at 5. What is the breakeven point at expiration?medium
  400. An investor writes 1 cash-secured XYZ 55 put at 6. What is the breakeven point at expiration?medium
  401. An investor buys 1 XYZ 60 call at 2. What is the breakeven point at expiration?medium
  402. An investor buys 1 XYZ 65 call at 3. What is the maximum possible loss?medium
  403. An investor writes 1 uncovered XYZ 70 call at 4. What is the maximum possible gain?medium
  404. An investor buys 1 XYZ 75 put at 5. What is the breakeven point at expiration?medium
  405. An investor writes 1 cash-secured XYZ 40 put at 6. What is the breakeven point at expiration?medium
  406. An investor buys 1 XYZ 45 call at 2. What is the breakeven point at expiration?medium
  407. An investor buys 1 XYZ 50 call at 3. What is the maximum possible loss?medium
  408. An investor writes 1 uncovered XYZ 55 call at 4. What is the maximum possible gain?medium
  409. An investor buys 1 XYZ 60 put at 5. What is the breakeven point at expiration?medium
  410. An investor writes 1 cash-secured XYZ 65 put at 6. What is the breakeven point at expiration?medium
  411. An investor buys 1 XYZ 70 call at 2. What is the breakeven point at expiration?medium
  412. An investor buys 1 XYZ 75 call at 3. What is the maximum possible loss?medium
  413. An investor writes 1 uncovered XYZ 40 call at 4. What is the maximum possible gain?medium
  414. An investor buys 1 XYZ 45 put at 5. What is the breakeven point at expiration?medium
  415. An investor writes 1 cash-secured XYZ 50 put at 6. What is the breakeven point at expiration?medium
  416. An investor buys 1 XYZ 55 call at 2. What is the breakeven point at expiration?medium
  417. An investor buys 1 XYZ 60 call at 3. What is the maximum possible loss?medium
  418. An investor writes 1 uncovered XYZ 65 call at 4. What is the maximum possible gain?medium
  419. An investor buys 1 XYZ 70 put at 5. What is the breakeven point at expiration?medium
  420. An investor writes 1 cash-secured XYZ 75 put at 6. What is the breakeven point at expiration?medium
  421. A 35-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  422. A 36-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  423. A 401(k) plan is best described as:medium
  424. Which retirement plan is designed primarily for self-employed individuals and small business owners?medium
  425. Taking a distribution from a retirement account before age 59½ usually results in:medium
  426. A 40-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  427. A 41-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  428. A 45-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  429. A 46-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  430. A 50-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  431. A 51-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  432. A 55-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  433. A 56-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  434. A 60-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  435. A 61-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  436. A 65-year-old customer contributes to a traditional IRA and meets the eligibility rules. The primary tax feature is that contributions may…medium
  437. A 66-year-old investor wants tax-free qualified withdrawals in retirement. Which plan best fits?medium
  438. A direct participation program investor is typically considered a:medium
  439. Cash flow distributed by a real estate limited partnership is best described as:medium
  440. Compared with listed equities, DPP interests are generally:medium
  441. The primary economic attraction of an oil and gas drilling program for many investors has historically been:medium
  442. Which risk is especially relevant to a real estate DPP?medium
  443. A stock selling at $20 with earnings per share of $2 has a price-to-earnings ratio of:medium
  444. Fundamental analysis focuses primarily on:medium
  445. A bond selling at a premium to par will generally have a current yield that is:medium
  446. In technical analysis, resistance is best described as:medium
  447. A stock selling at $30 with earnings per share of $2 has a price-to-earnings ratio of:medium
  448. A stock selling at $24 with earnings per share of $2 has a price-to-earnings ratio of:medium
  449. A stock selling at $34 with earnings per share of $2 has a price-to-earnings ratio of:medium
  450. A stock selling at $28 with earnings per share of $2 has a price-to-earnings ratio of:medium
  451. A stock selling at $22 with earnings per share of $2 has a price-to-earnings ratio of:medium
  452. A stock selling at $32 with earnings per share of $2 has a price-to-earnings ratio of:medium
  453. A stock selling at $26 with earnings per share of $2 has a price-to-earnings ratio of:medium
  454. A customer buys $4,000 of stock in a new margin account. Under Regulation T, the initial deposit requirement is:medium
  455. A customer buys stock on margin for $5,000 and deposits 50%. If the market value later falls to $4,500, the customer’s equity is:medium
  456. What is the minimum maintenance equity in a long margin account with securities worth $5,500?medium
  457. For a short sale with current market value of $8,000, the minimum equity requirement is generally:medium
  458. A customer buys $8,000 of stock in a new margin account. Under Regulation T, the initial deposit requirement is:medium
  459. A customer buys stock on margin for $9,000 and deposits 50%. If the market value later falls to $8,500, the customer’s equity is:medium
  460. What is the minimum maintenance equity in a long margin account with securities worth $9,500?medium
  461. For a short sale with current market value of $6,000, the minimum equity requirement is generally:medium
  462. For a short sale with current market value of $10,000, the minimum equity requirement is generally:medium
  463. Asset allocation is best described as:hard
  464. A customer with a long time horizon and high risk tolerance would generally be expected to have a portfolio with:hard
  465. Rebalancing a portfolio means:hard
  466. Dollar-cost averaging involves:hard
  467. A capital gain on stock held for more than one year is generally taxed at:hard
  468. The wash sale rule generally disallows a loss deduction if the investor buys substantially identical securities within:hard
  469. When mutual fund shares are sold, cost basis may be determined using approved methods such as:hard
  470. Municipal bond interest is generally:hard
  471. A customer sells stock for a loss and then repurchases substantially identical shares 10 days later. The tax effect is that the loss is:hard
More Series 7 topics