STC SERIES 7 FINAL #2 EXAM 2025/2026 WITH
QUESTIONS AND VERIFIED ANSWERS ||
ALREADY GRADED A+ | GUARANTEED PASS |
LATEST VERSION!!!
Which of the following positions/strategies is NOT bullish?
A. A married put
B. A short put
C. A long 40 call and a short 50 call
D. Writing a straddle - CORRECT ANSWER - D. Writing a straddle
Straddle writers expect a neutral market and obtain the maximum gain if each
option expires. Each of the other choices has an opportunity for a profit if the
underlying security rises in value.
Which of the following positions would be considered a covered option?
A. Long the stock, short a put
B. Long the stock, long a call
C. Short the stock, short a put
D. Short the stock, long a put - CORRECT ANSWER - C. Short the stock, short a
put
The terms covered or uncovered (naked) refer only to the seller (writer) of an
option (also known as being short the option). If the seller of an option can fulfill
the obligation of the contract without additional risk, he is considered covered. For
example, the seller of a put option is obligated to purchase stock if the put option is
exercised against the writer. If the customer is short the stock and the put is
exercised, the seller of the put option would buy the stock to cover or close out the
short stock position. A call option writer is covered if he is long or owns the stock
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,since, if the call is exercised, the seller of the call would be able to deliver the stock
he is long.
Which of the following statements is NOT TRUE concerning the Student Loan
Marketing Association (Sallie Mae)?
A. It issues securities that can be redeemed to pay for college education
B. It issues securities that are not backed by the U.S. government
C. It purchases federally sponsored student loans
D. It provides loans to educational institutions - CORRECT ANSWER - A. It
issues securities that can be redeemed to pay for college education
The Student Loan Marketing Association (known as SLMA or Sallie Mae)
provides liquidity to student loan makers by purchasing federally sponsored
student loans. It also lends funds directly to educational institutions. Sallie Mae
securities are not backed by the full faith and credit of the U.S. government, but the
SLMA maintains a direct line of credit with the U.S. government. It does not issue
securities that can be redeemed to pay for college education.
A new issue of municipal bonds has an aggregate par value of $10,000,000. The
syndicate received $5,000,000 in designated orders, $5,000,000 in group orders,
and $5,000,000 in member orders. How will the issue be allocated?
A. $5 MM group and $5 MM designated
B. $5 MM group and $5 MM member
C. $5 MM designated, $2 1/2 MM group, and $2 1/2 MM member
D. $3 1/3 MM designated, $3 1/3 MM group, and $3 1/3 MM member -
CORRECT ANSWER - A. $5 MM group and $5 MM designated
When allocating bonds in a new municipal issue, presale orders normally have first
priority. This is followed by group net, designated, and then member orders. The 5
MM in group orders and 5 MM in designated orders will be allocated. There are no
bonds left for member orders.
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,An investor purchases the following bonds: State of Florida 8% bond due 2020,
State of California 8 1/2% bond due 2020, State of New York Housing Finance
Agency 9% Revenue bond due 2030, and Wayne County, Michigan 8 1/2% Water
and Sewer Revenue bond due 2030. This portfolio offers:
A. Maturity diversification
B. Coupon diversification
C. Geographical diversification
D. Type diversification - CORRECT ANSWER - C. Geographical diversification
The portfolio offers the investor geographical diversification because the issues are
from different municipalities throughout the country.
Two individuals hold $100,000 in assets in a JTWROS account. Each party's
ownership in the account may be described as:
A. Equal and divided
B. Equal and undivided
C. Unequal and divided
D. Unequal and undivided - CORRECT ANSWER - B. Equal and undivided
In a JTWROS account, each holder's interest is equal and undivided. Each position
in the account is owned by both persons.
Which of the following statements is TRUE regarding spreads?
A. A put spread created for a net debit is bearish
B. A put spread created for a net credit is bearish
C. A call spread created for a net credit is bullish
D. A call spread created for a net debit is bearish - CORRECT ANSWER - A. A
put spread created for a net debit is bearish
A put spread created for a net debit is bearish. A bearish put (or call) spread
involves selling the lower exercise price and buying the higher exercise price. For
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, a put spread, the lower exercise price will have the lower premium and, therefore,
the spread will be done at a debit.
In a large private placement, an investment banking firm has purchased securities
directly from an oil and gas company based in Houston, Texas. These securities
may be resold immediately to:
A. Any type of investor
B. Only accredited investors
C. Only institutional accredited investors
D. Only qualified institutional buyers (QIBs) - CORRECT ANSWER - D. Only
qualified institutional buyers (QIBs)
This is an example of a Rule 144 A transaction. These transactions are usually
structured as a private placement between an issuer and an investment banking
firm(s) and are exempt from SEC registration. Due to the exemption provided
under SEC Rule 144A, after acquiring the securities, the firm may then
immediately reoffer them exclusively to a purchaser that is a QIB. Securities
offered under Regulation D may be sold to accredited investors, but a holding
period applies. An institutional accredited investor is defined as a non-individual
(e.g., a bank, trust, a pension or mutual fund). However, an institutional accredited
investor is only defined as a QIB if its portfolio is worth at least $100 million.
A Regulation A+ exemption is allowed for an issuer that's offering:
A. 500,000 shares or less
B. Securities with a value not exceeding $10,000,000
C. Securities with a value not exceeding $50,000,000
D. Securities being sold to only residents of one specific state - CORRECT
ANSWER - C. Securities with a value not exceeding $50,000,000
A Regulation A+ offering is exempt from the registration and prospectus
requirements under the Securities Act of 1933. The offering is limited to the
issuance of $50,000,000 worth of securities during a 12-month period.
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QUESTIONS AND VERIFIED ANSWERS ||
ALREADY GRADED A+ | GUARANTEED PASS |
LATEST VERSION!!!
Which of the following positions/strategies is NOT bullish?
A. A married put
B. A short put
C. A long 40 call and a short 50 call
D. Writing a straddle - CORRECT ANSWER - D. Writing a straddle
Straddle writers expect a neutral market and obtain the maximum gain if each
option expires. Each of the other choices has an opportunity for a profit if the
underlying security rises in value.
Which of the following positions would be considered a covered option?
A. Long the stock, short a put
B. Long the stock, long a call
C. Short the stock, short a put
D. Short the stock, long a put - CORRECT ANSWER - C. Short the stock, short a
put
The terms covered or uncovered (naked) refer only to the seller (writer) of an
option (also known as being short the option). If the seller of an option can fulfill
the obligation of the contract without additional risk, he is considered covered. For
example, the seller of a put option is obligated to purchase stock if the put option is
exercised against the writer. If the customer is short the stock and the put is
exercised, the seller of the put option would buy the stock to cover or close out the
short stock position. A call option writer is covered if he is long or owns the stock
1|Page
,since, if the call is exercised, the seller of the call would be able to deliver the stock
he is long.
Which of the following statements is NOT TRUE concerning the Student Loan
Marketing Association (Sallie Mae)?
A. It issues securities that can be redeemed to pay for college education
B. It issues securities that are not backed by the U.S. government
C. It purchases federally sponsored student loans
D. It provides loans to educational institutions - CORRECT ANSWER - A. It
issues securities that can be redeemed to pay for college education
The Student Loan Marketing Association (known as SLMA or Sallie Mae)
provides liquidity to student loan makers by purchasing federally sponsored
student loans. It also lends funds directly to educational institutions. Sallie Mae
securities are not backed by the full faith and credit of the U.S. government, but the
SLMA maintains a direct line of credit with the U.S. government. It does not issue
securities that can be redeemed to pay for college education.
A new issue of municipal bonds has an aggregate par value of $10,000,000. The
syndicate received $5,000,000 in designated orders, $5,000,000 in group orders,
and $5,000,000 in member orders. How will the issue be allocated?
A. $5 MM group and $5 MM designated
B. $5 MM group and $5 MM member
C. $5 MM designated, $2 1/2 MM group, and $2 1/2 MM member
D. $3 1/3 MM designated, $3 1/3 MM group, and $3 1/3 MM member -
CORRECT ANSWER - A. $5 MM group and $5 MM designated
When allocating bonds in a new municipal issue, presale orders normally have first
priority. This is followed by group net, designated, and then member orders. The 5
MM in group orders and 5 MM in designated orders will be allocated. There are no
bonds left for member orders.
2|Page
,An investor purchases the following bonds: State of Florida 8% bond due 2020,
State of California 8 1/2% bond due 2020, State of New York Housing Finance
Agency 9% Revenue bond due 2030, and Wayne County, Michigan 8 1/2% Water
and Sewer Revenue bond due 2030. This portfolio offers:
A. Maturity diversification
B. Coupon diversification
C. Geographical diversification
D. Type diversification - CORRECT ANSWER - C. Geographical diversification
The portfolio offers the investor geographical diversification because the issues are
from different municipalities throughout the country.
Two individuals hold $100,000 in assets in a JTWROS account. Each party's
ownership in the account may be described as:
A. Equal and divided
B. Equal and undivided
C. Unequal and divided
D. Unequal and undivided - CORRECT ANSWER - B. Equal and undivided
In a JTWROS account, each holder's interest is equal and undivided. Each position
in the account is owned by both persons.
Which of the following statements is TRUE regarding spreads?
A. A put spread created for a net debit is bearish
B. A put spread created for a net credit is bearish
C. A call spread created for a net credit is bullish
D. A call spread created for a net debit is bearish - CORRECT ANSWER - A. A
put spread created for a net debit is bearish
A put spread created for a net debit is bearish. A bearish put (or call) spread
involves selling the lower exercise price and buying the higher exercise price. For
3|Page
, a put spread, the lower exercise price will have the lower premium and, therefore,
the spread will be done at a debit.
In a large private placement, an investment banking firm has purchased securities
directly from an oil and gas company based in Houston, Texas. These securities
may be resold immediately to:
A. Any type of investor
B. Only accredited investors
C. Only institutional accredited investors
D. Only qualified institutional buyers (QIBs) - CORRECT ANSWER - D. Only
qualified institutional buyers (QIBs)
This is an example of a Rule 144 A transaction. These transactions are usually
structured as a private placement between an issuer and an investment banking
firm(s) and are exempt from SEC registration. Due to the exemption provided
under SEC Rule 144A, after acquiring the securities, the firm may then
immediately reoffer them exclusively to a purchaser that is a QIB. Securities
offered under Regulation D may be sold to accredited investors, but a holding
period applies. An institutional accredited investor is defined as a non-individual
(e.g., a bank, trust, a pension or mutual fund). However, an institutional accredited
investor is only defined as a QIB if its portfolio is worth at least $100 million.
A Regulation A+ exemption is allowed for an issuer that's offering:
A. 500,000 shares or less
B. Securities with a value not exceeding $10,000,000
C. Securities with a value not exceeding $50,000,000
D. Securities being sold to only residents of one specific state - CORRECT
ANSWER - C. Securities with a value not exceeding $50,000,000
A Regulation A+ offering is exempt from the registration and prospectus
requirements under the Securities Act of 1933. The offering is limited to the
issuance of $50,000,000 worth of securities during a 12-month period.
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