Series 7|135 Practice Exam Quiz Questions Containing Answrs|49 Pages
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A 2X leveraged inverse ETF tracks an index that has recently fallen 2%. If the ETF was priced at $25 per share before the drop in the indices price, where should the ETF be priced now, assuming the ETF portfolio performed as intended? - ️️A)
Down $2 per share
B)
Up $4 per share
C)
Up $1 pe...
Series 7|135 Practice Exam Quiz
Questions
A 2X leveraged inverse ETF tracks an index that has recently fallen 2%. If the ETF was priced at $25 per
share before the drop in the indices price, where should the ETF be priced now, assuming the ETF
portfolio performed as intended? - ✔ ✔ A)
Down $2 per share
B)
Up $4 per share
C)
Up $1 per share*
D)
Down $1 per share
A 50-year-old investor purchases a single payment deferred variable annuity with a premium of $50,000.
Five years later, the value of the account is $45,000, and the investor makes a $10,000 withdrawal. The
tax consequences of this action would be - ✔ ✔ A)
ordinary income on the $5,000 difference between the purchase price and the current value.
B)
no tax is due.*
C)
ordinary income on the entire $10,000 withdrawn plus a penalty of 10% because the investor is only 55
years old.\
D)
ordinary income on the $5,000 difference between the purchase price and the current value plus a
penalty of 10% because the investor is only 55 years old.
A bond is being issued to build a toll road. It has been identified that the state does not own all of the
property that the road is going to be built upon. This would most likely be disclosed in - ✔ ✔ A)
the prospectus.
,B)
the trust indenture.
C)
the bond resolution.*
D)
the qualified legal opinion.
A bond is quoted as QRS Zr 39. This quote tells an investor that the bond - ✔ ✔ A)
pays interest semiannually.
B)
pays no interest until maturity.*
C)
is backed by the U.S. government.
D)
pays interest annually.
A broker-dealer that is a financial advisor to a municipal issuer - ✔ ✔ A)
can act as an underwriter of the issuer's bonds in a competitive bid underwriting only if they want to
receive compensation for both services.
B)
can act as an underwriter of the issuer's bonds in a negotiated underwriting or competitive bid
underwriting and receive compensation for both services.*
C)
cannot act as an underwriter of the issuer's bonds in a negotiated or competitive bid underwriting and
receive compensation for both services.
D)
can act as an underwriter of the issuer's bonds in a negotiated underwriting only if they want to receive
compensation for both services.
,A broker-dealer wants to reference its membership with FINRA on its website. Regarding the reference,
all of the following are true except - ✔ ✔ A)
if the FINRA reference is made, a hyperlink to FINRA's website is mandated by FINRA.
B)
the FINRA reference is intended to demonstrate that the broker-dealer has the approval of FINRA in all
of its business dealings.*
C)
if the FINRA reference is made, a hyperlink to FINRA's website must be in close proximity to the
reference.
D)
there is no requirement that any FINRA member broker-dealer shall reference FINRA by name or logo on
its website.
A client interested in Treasury bills (T-bills) asks you to explain their features. Which of these is correct? -
✔ ✔ A)
They are generally callable after the first 6 months.
B)
They are all auctioned on a monthly basis.*
C)
They have a maximum maturity of 365 days.
D)
They are quoted with a bid higher than the ask.
A client, age 52, wants to know if there are any circumstances that will allow withdrawals from her IRA
without having to pay the 10% penalty. One example you could give is - ✔ ✔ A)
premiums for medical insurance in excess of defined adjusted gross income (AGI) limits.
B)
up to $10,000 annually for the first-time purchase of a principal residence.
C)
education expenses for one of her grandchildren.*
, D)
housing expenses while she is unemployed.
A corporation has issued debt securities backed by the securities of other companies that it holds in its
corporate investment portfolio. These debt securities are known as - ✔ ✔ A)
collateral trust bonds.*
B)
equipment trust certificates.
C)
subordinated debentures.
D)
mortgage bonds.
A customer asks if there are any debt instruments providing income that might at least keep pace with
inflation and offer some tax advantages. What suitable recommendation could be made that would
meet the customer's criteria? - ✔ ✔ A)
ADRs
B)
TIPS*
C)
U.S. T-bills
D)
GNMAs
A customer calls you and excitedly tells you that she just had her first child. She says her mother-in-law
gifted $20,000 to them in honor of the birth. She wants to invest it to have funds available for the child's
higher education in 18 years. She wants assurance that the principal will grow, regardless of market
conditions. Which of the following would be the most appropriate recommendation? - ✔ ✔ A)
Blue-chip stocks
B)
U.S. Treasury STRIPS maturing in 18 years
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