Series 7 Practice Exam 3

When discussing a corporation’s capitalization, each of the below would be included except:

Miami-Dade County currently has the following four GOs outstanding. All issues possess a call feature and have coupons and maturities as shown below. Assume all issues have similar principal amounts outstanding. In the event interest rates decline, and the County plans to do a refunding of only one of the four outstanding GOs, which issue would most likely be called?

When viewing the latest quotes on T-bills, you note that the current quote on the new 3 month Bills, 0.55 − 0.50, is somewhat higher than the quote on new 3 month Bills at the previous auction.

CPU Industries, Inc. (ticker symbol CPU) has $50,000,000 par value convertible debentures outstanding with a 40 to 1 conversion ratio. If the bonds are currently trading at 110 and are above parity, CPU common must be trading:

All of the below represent bond sweeteners with the exception of:

Stabilizing a new stock issue

I.    May occur once the S-1 has been filed with the SEC

II.   May only occur if disclosed in the final prospectus

III.  May not occur at or above the POP

IV.  If necessary, is normally a function performed by a syndicate manager

Lyon Technology is being quoted by 3 market makers as follows:

Market Maker A     42.22 – 42.72     10 by 15

Market Maker B     42.28 – 42.75     15 by 10

Market Maker C     42.20 – 42.68     5 by 5

If a member firm received and accepted a customer sell order for 500 shares of Lyon Tech common, the mark-up or mark-down would be based upon:

Your firm is the lead underwriter of a $100,000,000 municipal general obligation offering of New York City. One of the key elements in the list of disclosures to prospective investors is the legal opinion. Pick from the below who prepares and issues the legal opinion for this bond issue?

As an RR, you’ve determined that investment companies would be a suitable product for several of your customers. In your research, you’ve located two companies and their NAV and Offer Prices respectively are shown below:

Company A:  18.45  −  20.25

Company B:  8.79  −  8.15

Which of these companies could be an open-end management investment company?

Among the most popular features of mutual funds is the availability of reinvestment of dividend and capital gains distributions into full and fractional shares of the fund. None of the following statements about this reinvestment privilege is untrue except:

Mr. and Mrs. Smith, a couple roughly 15 years from retirement, have inquired about the availability of a product you might recommend to them which accommodates their investment objective, which is a hedge against both inflation and deflation. Which of the below would be most suitable?

Each member firm must provide firm element continuing education training which is appropriate to the type and size of the member. However, FINRA rules mandate Regulatory Element CE testing on a specific periodic schedule. For an associated person who has just reached his or her 6th anniversary as a registered rep, in how many years will they be required to perform the regulatory element CE testing?

In the course of opening a new margin account, an individual customer is required to sign a number of documents provided by the member firm. Choose from the below which documents, if any, require the customer’s signature.

I.    Loan consent agreement

II.   Hypothecation agreement

III.  Credit agreement

Mr. Woods, an existing cash account customer of yours, has spoken with you regarding his travel plans for the upcoming 3 months. He’s indicated he does not want to receive the regular monthly customer statements and confirmations of transactions while he’s out of town for this extended period of time. As his registered rep, you inform Mr. Woods:

Each of the below will have no impact upon the NAV per share of an open-end management investment company with the exception of:

As a financial advisor, your client has asked which form of business enterprise would provide limited liability and not be subject to internal revenue code taxation. Though you point out to the client that you are neither an attorney nor an accountant, you could inform the client that each of the below generally satisfy those conditions except:

A United States Treasury Note with a $5,000 par value is quoted 106.10 – 106.15. A customer sell order would be executed, disregarding commissions, at which of the following prices assuming no change in the quote?

In accordance with the latest FINRA rules, under what circumstances may associated persons buy common shares of an IPO on the offering in their own account?

SEC Rule 15c2-1 mandates that the maximum rehypothecation permissible by a member firm is:

Which of the below investments trades on an exchange at a price which is unrelated to its underlying value?

Research indicates that the stock of BNM Corp. is in an inverted head and shoulders formation. This most likely signals:

According to FINRA rules, the best approach when investigating allegations of churning a customer’s account is to focus on:

Which of the portfolio positions described below has the greatest risk exposure?

In the opening of a new options account, certain procedures must be followed in accordance with CBOE and/or other SRO requirements. Which of the following represents the final step in the options account procedures?

Mrs. Couples has been referred to you by one of your long-time clients. It seems Mrs. C has an account at another B/D and would like to make a change. After speaking with you, she has decided to do an account transfer.

Which of the following most accurately describes the time requirements upon her soon-to-be former firm to complete the transfer process?