Series 7 STC Exam Questions 2025
With 100% Correct Answers
When an arbitrator has decided to expunge (remove) customer dispute-related information
from the Central Registry Depository (CRD): - CORRECT ANSWER✔✔it's permanently deleted
and not available to the public, regulators, or prospective employers
The market price for a closed-end investment company is based upon: - CORRECT
ANSWER✔✔supply and demand for the shares in the marketplace. A closed-end investment
company share may sell at, above, or below its net asset value.
What type of bond is issued as a municipal bond and qualifies as a private activity bond, but
may not provide tax-exempt interest to certain investors? - CORRECT ANSWER✔✔AMT bond
required to pay tax on the interest received from a private activity bond. The AMT rules are
enacted to ensure that higher income individuals pay a specified minimum amount of tax
Which of the following is generally the largest portion of an underwriting spread? - CORRECT
ANSWER✔✔Selling concession
If securities are received as a gift, how is the cost basis determined? - CORRECT ANSWER✔✔It's
the lesser of the market value or the donor's cost basis.
FINRA's website address must be provided to each customer: - CORRECT ANSWER✔✔Annually
For individual investors, the interest derived from state-issued municipal bonds is exempt from
federal income tax. The investor may be subject to state income tax; however: - CORRECT
ANSWER✔✔It depends on the tax status of the investor's home state
,The Jumpstart Our Business Startups (JOBS) Act established: - CORRECT ANSWER✔✔the rules
for small businesses to raise capital using the internet through a process that's referred to as
crowdfunding. Funds can only be received through an SEC-registered funding portal that's
established by a FINRA member. Funds cannot be sent directly to the broker-dealer or the
issuer.
All margin accounts are required to have their values calculated at the close of trading on each
business day. This procedure is referred to as: - CORRECT ANSWER✔✔Marking-to-the-market
As a result of falling interest rates, a significant number of bonds that are held by a bond fund
have been called. Rather than reinvesting money, the fund has distributed the proceeds to its
shareholders as a return of capital. How will this distribution be taxed to the shareholders? -
CORRECT ANSWER✔✔It's not taxed since it's a return of cost basis.
Both a wash sale and a bond tax swap involve an investor selling a bond for a loss, then
repurchasing another bond to replace it. The bond tax swap allows an investor to - CORRECT
ANSWER✔✔deduct her loss; however, the wash sale rule (if triggered) disallows the loss and
doesn't allow the loss to be deducted. In order to avoid the wash sale rule, an investor must
repurchase a bond with material differences (e.g., a different interest rate and/or maturity
date).
Clients who want to reduce their tax liability may invest in which of the following? - CORRECT
ANSWER✔✔Traditional IRAs and limited partnerships
What information would NOT need to be disclosed by a broker-dealer in a research report?
-The broker-dealer received compensation for assisting the company in an acquisition
-The analyst provided a target price for the company
-The analyst is a director of the company
, -The analyst had owned shares in the company one year before writing the report - CORRECT
ANSWER✔✔-The analyst had owned shares in the company one year before writing the report
A broker-dealer is not required to respond to complaints that are delivered: - CORRECT
ANSWER✔✔Orally
In order to achieve capital growth, a customer may consider which of the following
investments?
-Preferred stock and utility stock
-Covered calls and long straddles
-Common stock and index funds
-ETNs and leveraged ETFs - CORRECT ANSWER✔✔Common stock and index funds
If a withdrawal from a variable annuity is taken during the accumulation period, how is it taxed?
- CORRECT ANSWER✔✔Earnings are withdrawn first and taxed as ordinary income.
A revenue bond and a special tax bond are both considered debt obligations of - CORRECT
ANSWER✔✔a muni gov't
Note: Any closed-end fund that's issued by an investment company is considered a debt
obligation of that investment company, not the issuer of the bonds that its holding. The fact that
the fund owns municipal bonds is irrelevant
Which of the following statements is TRUE regarding dividends in arrears for cumulative
preferred stock?
-They must be paid in full before common stockholders receive dividends.
-They will never be paid.
With 100% Correct Answers
When an arbitrator has decided to expunge (remove) customer dispute-related information
from the Central Registry Depository (CRD): - CORRECT ANSWER✔✔it's permanently deleted
and not available to the public, regulators, or prospective employers
The market price for a closed-end investment company is based upon: - CORRECT
ANSWER✔✔supply and demand for the shares in the marketplace. A closed-end investment
company share may sell at, above, or below its net asset value.
What type of bond is issued as a municipal bond and qualifies as a private activity bond, but
may not provide tax-exempt interest to certain investors? - CORRECT ANSWER✔✔AMT bond
required to pay tax on the interest received from a private activity bond. The AMT rules are
enacted to ensure that higher income individuals pay a specified minimum amount of tax
Which of the following is generally the largest portion of an underwriting spread? - CORRECT
ANSWER✔✔Selling concession
If securities are received as a gift, how is the cost basis determined? - CORRECT ANSWER✔✔It's
the lesser of the market value or the donor's cost basis.
FINRA's website address must be provided to each customer: - CORRECT ANSWER✔✔Annually
For individual investors, the interest derived from state-issued municipal bonds is exempt from
federal income tax. The investor may be subject to state income tax; however: - CORRECT
ANSWER✔✔It depends on the tax status of the investor's home state
,The Jumpstart Our Business Startups (JOBS) Act established: - CORRECT ANSWER✔✔the rules
for small businesses to raise capital using the internet through a process that's referred to as
crowdfunding. Funds can only be received through an SEC-registered funding portal that's
established by a FINRA member. Funds cannot be sent directly to the broker-dealer or the
issuer.
All margin accounts are required to have their values calculated at the close of trading on each
business day. This procedure is referred to as: - CORRECT ANSWER✔✔Marking-to-the-market
As a result of falling interest rates, a significant number of bonds that are held by a bond fund
have been called. Rather than reinvesting money, the fund has distributed the proceeds to its
shareholders as a return of capital. How will this distribution be taxed to the shareholders? -
CORRECT ANSWER✔✔It's not taxed since it's a return of cost basis.
Both a wash sale and a bond tax swap involve an investor selling a bond for a loss, then
repurchasing another bond to replace it. The bond tax swap allows an investor to - CORRECT
ANSWER✔✔deduct her loss; however, the wash sale rule (if triggered) disallows the loss and
doesn't allow the loss to be deducted. In order to avoid the wash sale rule, an investor must
repurchase a bond with material differences (e.g., a different interest rate and/or maturity
date).
Clients who want to reduce their tax liability may invest in which of the following? - CORRECT
ANSWER✔✔Traditional IRAs and limited partnerships
What information would NOT need to be disclosed by a broker-dealer in a research report?
-The broker-dealer received compensation for assisting the company in an acquisition
-The analyst provided a target price for the company
-The analyst is a director of the company
, -The analyst had owned shares in the company one year before writing the report - CORRECT
ANSWER✔✔-The analyst had owned shares in the company one year before writing the report
A broker-dealer is not required to respond to complaints that are delivered: - CORRECT
ANSWER✔✔Orally
In order to achieve capital growth, a customer may consider which of the following
investments?
-Preferred stock and utility stock
-Covered calls and long straddles
-Common stock and index funds
-ETNs and leveraged ETFs - CORRECT ANSWER✔✔Common stock and index funds
If a withdrawal from a variable annuity is taken during the accumulation period, how is it taxed?
- CORRECT ANSWER✔✔Earnings are withdrawn first and taxed as ordinary income.
A revenue bond and a special tax bond are both considered debt obligations of - CORRECT
ANSWER✔✔a muni gov't
Note: Any closed-end fund that's issued by an investment company is considered a debt
obligation of that investment company, not the issuer of the bonds that its holding. The fact that
the fund owns municipal bonds is irrelevant
Which of the following statements is TRUE regarding dividends in arrears for cumulative
preferred stock?
-They must be paid in full before common stockholders receive dividends.
-They will never be paid.
