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Series 7 Mastery Exam questions well answered graded A+
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Series 7 Mastery Exam questions well answered graded A+
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Series 7 Mastery ExamBalance sheet items affected by the issuance of new common stock would be - correct answer ✔✔total
assets and net worth. Issuing stock brings in new capital in the form of cash. This raises the assets and,
because stock is equity, raises the net worth by the same amount.
An investor was able to acquire 10,000 shares of RITVA common stock on its IPO at $10 per share. Today,
the stock is selling for $50 per share and the investor is nervous about the future for the market. An
order is turned in to sell 100 RITVA 55 calls at a premium of 2 and buy 100 RITVA 45 puts at a premium of
2. This strategy is - correct answer ✔✔a cashless collar. It is cashless is because the calls are sold for 2
and the puts bought for 2. That means no out of pocket cash. The investor has "put a collar" on the long
position in the stock by selling an out of the money call and buying an out of the money put.
A margin account has a market value of $24,000 and a debit balance of $20,000. The maintenance call
will be for - correct answer ✔✔$2,000. With equity of $4,000, this account is below minimum. The
maintenance call will be for an amount necessary to bring the account back to minimum. Minimum is
25% of $24,000, which is $6,000. Because equity is $4,000, the call will be for $2,000.
In a direct participation program limited partnership for tax purposes, - correct answer ✔✔income for
the general partners is earned income, but for the limited partners it is passive income. In a direct
participation program limited partnership for tax purposes, income for the general partners is earned
income, but for the limited partners it is passive income.
Stocks have statistically been in a bull market for several years. An investor that studies technical analysis
is bearish on the stock market in the short term. They would like to invest $100,000 of an investment
portfolio valued at $10 million and try to take advantage of the coming stock market correction. Which
of the following would be the wrong thing for a registered representative to recommend? - correct
answer ✔✔Place buy stops on the securities in the portfolio identified as the most likely to fall. Buy
stops are placed above the current market value of securities and would not benefit a customer that
expects the market to fall. In addition, the buy stop would close a short stock position if a short sale is
rising in value (and the short sale is losing money), or create a long stock position.
A registered representative intends to send the same email regarding an investment strategy and
product this week to her 10 retail clients currently having the highest net worth. Which of the following
accurately depicts how the email will be regulated under the Financial Industry Regulatory Authority's
(FINRA's) communications with the public rule? - correct answer ✔✔The email can be reviewed by a
, principal before or after use in accordance with the firm's written procedures regarding correspondence
and need not be filed with FINRA. Under FINRA's rules regarding communications with the public, the
email will be regulated as correspondence because it is being distributed to 25 retail customers or fewer
within a 30 calendar-day period. Review of correspondence by a principal can occur either before or
after use in accordance with the firm's written procedures and filing of correspondence with FINRA is not
required.
A customer is likely to experience the greatest purchasing power risk with which of the following
investments? - correct answer ✔✔A 30-year U.S. Treasury bond. Purchasing power or inflation risk is
greatest with long-term fixed income investments, regardless of their investment quality. ADRs represent
equities and the convertible preferred has the opportunity to convert into equity.
A corporate offering of 1 million additional shares to existing shareholders is a - correct answer ✔✔rights
offering. When new shares are being offered to existing shareholders before the general public, it is done
under the terms of a rights offering.
A couple with a child 10 years away from entering college has saved $160,000 for that single purpose.
Which of the following portfolio mixes would be the most suitable for meeting the investment objective?
- correct answer ✔✔30% T-notes, 70% zero-coupon bonds. Zero-coupon bonds, which are purchased at
a discount and mature at face value, are the most suitable investment for future anticipated expenses
such as college tuition. The T-notes, which are medium term U.S. government securities, would
additionally be a suitable investment where risk of principal loss wouldn't be a concern as it would with
equities or corporate bonds.
Your client has sold securities in a long margin account. All of the following are affected by the sale of
these securities in the account except - correct answer ✔✔equity. The equity does not change when a
sale takes place in a margin account. Equity will be affected only if the customer elects to withdraw some
or all of the proceeds. The SMA will go up; debit balance and market value will go down.
One July 45 mini-option contract call is quoted at 3. A buyer will pay - correct answer ✔✔$30. Each mini-
option contract represents 10 shares of the underlying equity security instead of 100 shares as is the
case for standard contracts. Therefore, the multiplier for both contract and premium for mini-contracts is
10. In this case, a single contract represents 10 shares at $45 per share and the premium of 3 represents
$30. $30 is the cost to the buyer.
The visible supply as shown in The Bond Buyer is the - correct answer ✔✔the total dollar volume of
municipal offerings expected to reach the market in the next 30 days. The visible supply refers to all new
issue municipal bonds projected to be issued for sale within the next 30 days.
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