Series 7 STC Practice Exam 2025 With
100% Correct Answers
If a firm places a temporary hold on a customer's account: - CORRECT ANSWER✔✔it applies to
either the entire account or specific disbursements
Portfolio margin permits an investor to: - CORRECT ANSWER✔✔assume greater leverage
- portfolio margin produces significantly lower margin requirements than strategy-based
margin, affording an investor greater leverage
The tranche with the longest maturity and, therefore, the last to receive interest and principal
payments within a CMO, is known as the: - CORRECT ANSWER✔✔z-tranche a.k.a. accrual bond
In the case of inherited securities, the value of the securities is determined at the time of death.
The heirs are always considered to have _____ holding periods. - CORRECT ANSWER✔✔long-
term
_____ provides backing for a term bond that has a required payment period at maturity -
CORRECT ANSWER✔✔Sinking fund
- sinking funds are saving accounts that assist issuers in paying for an outstanding bond issue.
Sinking funds are often associated with a term bond offering (i.e, a bond offering that matures
on a specific date). Escrow and crossover funding are terms that are associated with the
refinancing of outstanding bonds
As it relates to convertible bonds, _____ provides an arbitrage opportunity. - CORRECT
ANSWER✔✔stock trading at a premium to parity
, - parity exists when a convertible security is trading at a price that's equal to the total value of
the stock into which it's convertible. If the stock is trading at a premium to the parity price, the
bond can be converted into the stock and then sold at the higher price. This results in an
arbitrage opportunity. Conversely, if the stock is trading at or below the parity price, nothing can
be gained through conversion. Finally, if the convertible bond is trading at a premium to parity,
there's no reason to convert it into the stock
Accrued interest on new municipal bonds is calculated from the: - CORRECT ANSWER✔✔dated
date (the date from which interest starts to accrue on a municipal bond)
A BD receives a confirmation for a trade that does not appear on its record. The BD should send
a DK notice to: - CORRECT ANSWER✔✔the contrabroker
Prior to the maturity a variable-rate demand obligation, an investor has the right to receive the:
- CORRECT ANSWER✔✔par value plus accrued interest
The subscription agreement for a limited partnership does NOT specify: - CORRECT
ANSWER✔✔priority provisions upon liquidation
- All sales for limited partnership interests are conditioned upon acceptance by the general
partner. Typically, a limited partner is considered accepted into the program once the general
partner signs the subscription agreement. The subscription agreement will normally state the
suitability standards for the program, specify who must sign the agreement, specify to whom
the check must be made payable, and make inquiries of the purchaser to make sure that he
understands the ramifications of the investment. Priority provisions for liquidating a limited
partnership are found in the Certificate of Limited Partnership
_____ is NOT TRUE of industrial development revenue bonds? - CORRECT ANSWER✔✔their
credit rating is determined by an analysis of the municipal government issuing the bonds
100% Correct Answers
If a firm places a temporary hold on a customer's account: - CORRECT ANSWER✔✔it applies to
either the entire account or specific disbursements
Portfolio margin permits an investor to: - CORRECT ANSWER✔✔assume greater leverage
- portfolio margin produces significantly lower margin requirements than strategy-based
margin, affording an investor greater leverage
The tranche with the longest maturity and, therefore, the last to receive interest and principal
payments within a CMO, is known as the: - CORRECT ANSWER✔✔z-tranche a.k.a. accrual bond
In the case of inherited securities, the value of the securities is determined at the time of death.
The heirs are always considered to have _____ holding periods. - CORRECT ANSWER✔✔long-
term
_____ provides backing for a term bond that has a required payment period at maturity -
CORRECT ANSWER✔✔Sinking fund
- sinking funds are saving accounts that assist issuers in paying for an outstanding bond issue.
Sinking funds are often associated with a term bond offering (i.e, a bond offering that matures
on a specific date). Escrow and crossover funding are terms that are associated with the
refinancing of outstanding bonds
As it relates to convertible bonds, _____ provides an arbitrage opportunity. - CORRECT
ANSWER✔✔stock trading at a premium to parity
, - parity exists when a convertible security is trading at a price that's equal to the total value of
the stock into which it's convertible. If the stock is trading at a premium to the parity price, the
bond can be converted into the stock and then sold at the higher price. This results in an
arbitrage opportunity. Conversely, if the stock is trading at or below the parity price, nothing can
be gained through conversion. Finally, if the convertible bond is trading at a premium to parity,
there's no reason to convert it into the stock
Accrued interest on new municipal bonds is calculated from the: - CORRECT ANSWER✔✔dated
date (the date from which interest starts to accrue on a municipal bond)
A BD receives a confirmation for a trade that does not appear on its record. The BD should send
a DK notice to: - CORRECT ANSWER✔✔the contrabroker
Prior to the maturity a variable-rate demand obligation, an investor has the right to receive the:
- CORRECT ANSWER✔✔par value plus accrued interest
The subscription agreement for a limited partnership does NOT specify: - CORRECT
ANSWER✔✔priority provisions upon liquidation
- All sales for limited partnership interests are conditioned upon acceptance by the general
partner. Typically, a limited partner is considered accepted into the program once the general
partner signs the subscription agreement. The subscription agreement will normally state the
suitability standards for the program, specify who must sign the agreement, specify to whom
the check must be made payable, and make inquiries of the purchaser to make sure that he
understands the ramifications of the investment. Priority provisions for liquidating a limited
partnership are found in the Certificate of Limited Partnership
_____ is NOT TRUE of industrial development revenue bonds? - CORRECT ANSWER✔✔their
credit rating is determined by an analysis of the municipal government issuing the bonds
