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FINRA Series 7 Stimulated Exam 3|42 Questions with Verified Answers,100% CORRECT
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FINRA Series 7 Stimulated Exam 3|42 Questions with Verified Answers
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FINRA Series 7 Stimulated Exam 3|42 Questions withVerified Answers
Which of the following option strategies, besides going long a call, can be used to
purchase stock below its current market value?
A) Short call
B) Short straddle
C) Long put
D) Short put - CORRECT ANSWER A) Short call
B) Short straddle
C) Long put
D) Short put✅
If the put is exercised by the owner, the writer of the put will be obligated to
purchase the stock. The cost of the stock is reduced by the amount of premium
taken in when the put was written, allowing the investor to purchase the stock at
a net cost lower than the stock's current market value.
The sale of securities in a restricted margin account affects all of the following
except
A) market value.
B) special memorandum account.
C) debit balance.
D) equity. - CORRECT ANSWER A) market value.
B) special memorandum account.
C) debit balance.
D) equity.✅
A restricted margin account is one where the equity is below the 50% Regulation
T level. When a sale of securities owned in that margin account takes place, if the
client wishes to remove proceeds, the maximum permitted is 50% of the sale.
Your client's investment portfolio is 50% growth stocks, 10% foreign stocks, and
40% blue-chip stocks. If the client is interested in further diversification, which
mutual fund would best meet that goal?
,A) Aggressive growth fund
B) Emerging market fund
C) Bond fund
D) Global equity fund - CORRECT ANSWER A) Aggressive growth fund
B) Emerging market fund
C) Bond fund✅
D) Global equity fund
All of the current holdings are equities. To further diversify the current portfolio,
the bond fund would be the best choice of those given to meet this objective.
If 1 OEX 375 call is purchased at 3.25 and exercised when the S&P 100 closes at
381, the writer delivers which of the following to the holder?
A) $600 cash
B) $600 in stocks
C) $325 cash
D) $381 in securities - CORRECT ANSWER A) $600 cash✅
B) $600 in stocks
C) $325 cash
D) $381 in securities
Index options settle in cash. Physical delivery does not occur. The call buyer
receives cash equal to the difference between the strike price and the index
closing value on the day the option is exercised. With the index closing price of
381 and the strike price at 375, that difference is 6 points. With a multiplier of
$100, the settlement is $600.
If a customer buys 100 XYZ at 49 and writes 1 XYZ Nov 50 call, receiving $350 in
premiums, the breakeven point is
A) $52.50.
B) $53.50.
C) $45.50.
D) $46.50. - CORRECT ANSWER A) $52.50.
B) $53.50.
C) $45.50.✅
D) $46.50.
, This is a covered call, so the investor is protected against declining stock prices to
the extent of the premium received, and the breakeven is $45.50 $49 − $3.50).
A municipal issuer publishes an official notice of sale to indicate that the offering
will be made
A) for none of these.
B) on a competitive basis.
C) on a negotiated basis.
D) through a private placement. - CORRECT ANSWER A) for none of these.
B) on a competitive basis.✅
C) on a negotiated basis.
D) through a private placement.
An official notice of sale is the issuer's method of inviting competitive bids on a
new issue. It sets forth all of the information about the issue that a dealer would
need to make a bid, including the size of the offering; the maturity dates; and the
date, time, and place of the sale.
An investor in a limited partnership generating passive losses can offset these
against
I. passive income from other partnerships.
II. rental income from direct investments in real estate.
III. dividends received from listed securities.
IV. capital gains from the sale of unlisted securities.
A) II and III
B) I and III
C) III and IV
D) I and II - CORRECT ANSWER A) II and III
B) I and III
C) III and IV
D) I and II✅
Passive losses can be deducted from passive income and income from certain real
estate investments; it cannot be deducted from active or portfolio (investment)
income.
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