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Series 7 Final #2 questions well answered to pass
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Series 7 Final #2 questions well answered to pass
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Series 7 Final #2If the price of a stock breaks out through the support level, it is expected that the stock's price will: -
correct answer ✔✔B. Fall
A "support" level is a price below the current market, through which a stock's price tends not to fall.
Which statements are TRUE when comparing the NYSE and NASDAQ markets?
I The Specialist (DMM) trades on the NYSE
II The Specialist (DMM) trades on NASDAQ
III The Market Maker trades on the NYSE
IV The Market Maker trades on NASDAQ - correct answer ✔✔I and IV
Under Rule 10b-5-1, pre-arranged trading plans by insiders are:
I permitted only if the provisions cannot be altered during the plan's life
II permitted only if the provisions can be altered during the plan's life
III given a safe harbor to officers and directors against an "insider trading" prosecution if the plan is
followed
IV given a right of rescission for any trades that are deemed to be a violation of the insider trading rules -
correct answer ✔✔I & III
Rule 10b-5-1: written plans safe harbor insiders against "insider trading"
REIT shares are not redeemable; they are negotiable and trade on exchanges. REITs are similar to closed
end investment companies and must invest at least 75% of their assets in real estate activities to qualify
as a "regulated" investment company under Subchapter M of the Internal Revenue Code. - correct
answer ✔✔
Under FINRA rules, all of the following are necessary to open a corporate account EXCEPT:
,A. New Account Form
B. Corporate Charter
C. Corporate Resolution with Embossed Corporate Seal
D. Evidence of Domicile - correct answer ✔✔D. Evidence of Domicile
Which statement is TRUE about the tax treatment of short sales of securities?
A. Short sales can result in either a short term or long term capital gain or loss upon covering the short
position
B. Short sales can only result in short term capital gain or loss upon covering the short position
C. Short sales can only result in long term capital gain or loss upon covering the short position
D. Short sales are not taxed since a holding period is never established - correct answer ✔✔B.
Short Sales= ST capital g/l
An 85-year old retired client has living expenses of $15,000 per year. His portfolio is currently
allocated:50% Money Market Fund 40% Treasuries Yielding 1.20%10% Equities.The customer is
complaining that he is not earning enough from his portfolio to meet monthly living expenses. The BEST
recommendation to the customer is to:
A. do nothing
B. wait until interest rates rise before making any changes
C. liquidate half of the money market fund and invest it in 5 year corporate debentures yielding 2.70%
D. liquidate half of the money market fund and invest it in commodity futures - correct answer
✔✔Liquidate half the money market and invest in corporate debentures
The Securities Investors Corporation (SIPC) is: - correct answer ✔✔1) Non profit gov't sponsored corp
2) Every broker dealer reg. under Securites Exchange Act must be a member of SIPC
3) Insurance fund protecting against broker dealer insolvency
4) funded through annual assessments paid by broker- dealer members
, Variable annuity contracts contain which of the following guarantees?
I Interest Rate Guarantee
II Investment Guarantee
III Mortality Guarantee
IV Expense Guarantee - correct answer ✔✔III and IV
Mortality guarantee: will receive annuity throughout life
Expense guarantee: expense wont rise above a certain level, insurance comp. covers if it goes over
Which of the following are allowed investments in an Individual Retirement Account?
I Preferred Stock
II U.S. Government Gold Coins
III Antiques, Art, and Other Collectibles
IV U.S. Government Bonds - correct answer ✔✔I, II and IV
No tangibles except GOLD.
Antiques, Art, and & other collectibles are NOT allowed in IRAs
Conversion Ratio Formula - correct answer ✔✔Par Value / Conversion Price
Option advertising vs. sales literature - correct answer ✔✔Option advertising:sales material to public
audience
Sales Literature: sales material to specific audience (lecture)
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