Series-7 Exam Training Practice Tests (FINRA General Securities Representative Qualification Examination (GS))]

Question 1

Which of the following is considered a firm quotation in the over-the-counter market?

A. 27.50 subject B. 27.50 C. 27.50 workout D. both B and C

Correct Answer: B

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Question 2

Bubba's margin account has $2,000 of SMA,. If he buys $10,000 of new securities, how much additional cash must he deposit assuming a Reg T requirement of 50%?

A. $5,000 B. $4,800 C. $3,000 D. $6,000

Correct Answer: C

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Question 3

Which of the following organizations usually has a prominent role in guiding investment policies of mutual funds?

A. the management group B. the underwriter C. the custodian bank D. the plan company

Correct Answer: A

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Question 4

Which of the following would not normally be a function of an investment banker?

A. underwriting new issues of securities B. providing short-term capital needs to client companies C. assisting in large secondary offerings of securities D. providing long-term capital needs to client companies

Correct Answer: B

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Question 5

A front-end loan mutual fund plan is most suitable for:

A. an optional withdrawal plan B. a voluntary accumulation plan C. a contractual plan D. an automatic withdrawal plan

Correct Answer: C

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Question 6

A buy-in of a customer's sale transaction is mandated if the securities have not been received by the broker/dealer within how many business days following the settlement date:

A. 20 B. 30 C. 10 D. 5

Correct Answer: C

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Question 7

Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40.
What conversion ratio does Bubba determine?

A. 30 B. 25 C. 40 D. 15

Correct Answer: B

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Question 8

Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing. Under FINRA Conduct Rules, Bubba may:

A. not do so for his own account, buy may purchase shares for his sister's account B. not do so under any circumstance C. do so if his allotment is insubstantial and not disproportionate to public orders D. do so if he has a history of buying hot issues

Correct Answer: B

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Question 9

The public offering price of the securities of an open-end management investment company is:

A. the price used by distributors in determining sales incentive discounts to individual purchasers B. based upon net asset value of the securities underlying the shares of the issuer plus a 10 % sales charge C. determined by the relative demand for the shares of the issuer D. determined by a method set forth in the prospectus of the issuer

Correct Answer: D

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Question 10

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

A. if it is accompanied by a red herring B. under no circumstances C. if he has permission of his employer D. if his firm is not the managing underwriter

Correct Answer: B

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Question 11

The cost of maintaining an investment in a mutual fund is best reflected in the:

A. net investment income B. custodial fee C. sales charge D. expense ratio

Correct Answer: D

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Question 12

Bubba's pledge to purchase a specified dollar amount of a mutual fund within a specified period of time is called:

A. a promissory note B. an investment letter C. a stock power D. a letter of intent

Correct Answer: D

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Question 13

When a member firm buys or sells securities directly as principal with a public customer, it is acting as:

A. a dealer B. a broker C. an agent D. none of the above

Correct Answer: A

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Question 14

An offering price of 102 plus accrued interest applies to which of the following securities?

A. treasury bills B. certificates of deposit C. commercial paper D. banker's acceptances

Correct Answer: B

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FINRA General Securities Representative Qualification Examination (GS) - Series-7 Exam Practice Test