Finra Series-7 Exam Practice Test Instant Access

Question 1

What is the loan value on a call option held in a customer's margin account?

B50%

C30%

Dthe compliment of the FRB initial margin requirement for listed stocks

Answer : A

0. Options do not have loan value, except for long-term LEAPS.

Question 2

When depositors withdraw money from savings institutions to invest in US treasury securities, this is called:

Athe multiplier effect

Bdisintermediation

Creverse repo

Dopen market operations

Answer : B

disintermediation. An easier word would be preferable, but that's the correct term.

Question 3

In a monthly review of customer statements, Bubba notices that one of his firm's clients has paid for seven purchases five days late.

What does he do?

Adecides this situation is acceptable provided payment was received before any securities were sold

Bascertains whether the client had a sufficient bank balance on settlement date

Cnothing because this is not a violation provided the securities were not listed on the NYSE

Dascertains that extensions had been obtained under Reg T

Answer : D

ascertains that extensions had been obtained under Reg T. If valid reasons exist, extension of time for payment may be obtained.

Question 4

The maximum contribution an employer may make to a SEP-IRA is:

A$4,000

B$5,000

C25% of employee compensation

D100% of employee compensation

Answer : C

25% of employee compensation. There is also a dollar cap that is has an annual cost-of-living adjustment.

Question 5

Under what circumstances may a registered investment company change its investment objective?

Aafter SEC approval

Bafter it obtains a new charter from the state secretary

Cafter approval by a majority vote of the shareholders

Dafter providing notice that is recorded in the Federal Register

Answer : C

after approval by a majority vote of the shareholders. All vital interests of the shareholders are subject to their majority vote.

Question 6

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

Aregulate the activities of investment advisers

Bregulate the sale of securities on national exchanges

Cprovide for disclosure of information about new securities offerings

Dprovide for disclosure of the financial condition of underwriters

Answer : C

provide for disclosure of information about new securities offerings. The 1933 act is primarily concerned with registration and disclosures relating to new securities.

Question 7

A basis point is:

A0.10%

B0.01%

C1.00%

D0.001%

Answer : B

0.01%. A basis point is one-hundredth of a point. Since a point is 1%, a basis point is 0.01%. A bond price change of one basis point is ten cents ($1,000 x 0.01%).

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