Finra Series-7 Exam Practice Test Instant Access

Question 1

If a customer dies, the registered representative is required to:

Acancel all open (good 'til cancelled) orders

Bawait instructions and necessary papers from the executor of the estate

Csell out the account

Dboth A and B

Answer : D

both A and B. These describe the activities a registered representative should undertake when a customer dies.

Question 2

When a member firm buys or sells securities directly as principal with a public customer, it is acting as:

Aa dealer

Ba broker

Can agent

Dnone of the above

Answer : A

a dealer. When a firm does business directly with a customer, it is acting as a dealer. When it represents a customer, it is acting as a broker.

Question 3

The Bubba Insurance Company is not incorporated. It consists of Bubba and his two brothers as general partners, who maintain an active securities account in the name of the company. If one of the partners should suddenly die, what course of actions should be undertaken by the registered representative at the brokerage?

Afreeze the account from further activity until a death certificate and new partnership agreement are furnished to the brokerage

Bno special action is required because the death of a single partner does not terminate the partnership agreement

Cdistribute the assets in the account to the surviving partners

Dexecute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage

Answer : D

execute sell orders but do not accept buy orders or distribute assets from the account until a new partnership agreement is provided to the brokerage. Sell orders may be accepted but not buy orders or distributions.

Question 4

Bubba sells short 100 XYZ at $60 and makes the required Regulation T deposit of 50%. XYZ then rises I price to $65.

At this point what is the credit balance?

A$2,500

B$3,500

C$6,000

D$9,000

Answer : D

$9,000. Credit balances in short accounts do not change because of fluctuation in market prices. The initial deposit of $3,000 ($6,000 x 50%) plus the $6,000 from the short sale leave a credit balance of $9,000.

Question 5

The definition of debentures is:

Aa loan secured by real estate

Bcollateralized securities

Ca worthless security

Dsecurities backed by the general credit of the issuers but no specific collateral

Answer : D

securities backed by the general credit of the issuers but no specific collateral. And in the case of some issuers, that may be fairly worthless.

Question 6

If the Federal Reserve wished to ease credit, which of the following steps would it take?

Araise the discount rate

Bpurchase securities in the open market

Clower reserve requirements

Dboth B and C

Answer : D

both B and C. Buying in the open market injects funds into the economy. Lowering reserve requirements provides banks with more funds for lending.

Question 7

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

Athe underwriter will be penalized his profit on any securities repurchased from his clients

Ball stock purchased will be returned to the issuing corporation

Cthe manager will charge the syndicate the value of the shares

Dany shares repurchased are added to the treasury stock of the issuing corporation

Answer : A

the underwriter will be penalized his profit on any securities repurchased from his clients. Since clients sell shares back to the syndicate shortly after the offering, the underwriter has not made a proper distribution. The underwriter therefore may be penalized any profit.

Finra General Securities Representative Examination (GS) Series-7 Exam Practice Test