FINRA SERIES 7 Exam
FINRA SERIES 7 EXAM NEWEST 2025/2026 WITH COMPLETE
QUESTIONS AND CORRECT ANSWERS |ALREADY GRADED
A+||BRAND NEW VERSION!
A customer is holding 1000 shares of ABC Co. stock. The price of ABC's stock has
risen since she purchased it. She wishes to hedge her position while generating
additional income. Which of the following best accomplishes her goals?
A. Buy 10 calls on ABC
B. Write 10 calls on ABC
C. Buy 10 puts on ABC
D. Write 10 puts on ABC - ANSWER-B. Write 10 calls on ABC
Which is not one of FINRA's activities?
A. Operating and maintaining BrokerCheck
B. Overseeing the liquidation of bankrupt broker-dealers
C. Investigating its members and their associated persons for compliance with
securities law
D. Establishing rules governing OTC securities - ANSWER-B. Overseeing the
liquidation of bankrupt broker-dealers
A registered associate of a broker-dealer recommends a fairly conservative "bond
plus" strategy to clients. It involves the purchase of a zero-coupon Treasury that
will be worth a certain amount at maturity, and the purchase of equity index
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, FINRA SERIES 7 Exam
options with the remaining funds. The representative tells clients that the strategy
cannot lose money. Which of the following statements is true?
A. The principal value at maturity of zero coupon Treasuries is uncertain.
B. Because Treasury securities are guaranteed by the federal government, the
representative is technically correct.
C. The representative cannot make this guarantee against loss.
D. The strategy is risky because it involves options. - ANSWER-C. The
representative cannot make this guarantee against loss.
What does a transfer agent do?
A. Records who owns securities and in what form, and creates physical stock
certificates when needed
B. Repays bondholders when their bonds mature
C. Audits the recording of securities ownership and makes sure issued shares of
stock do not exceed authorized shares
D. Manages the process of issuing stocks or bonds, including marketing and selling
them - ANSWER-A. Records who owns securities and in what form, and creates
physical stock certificates when needed
Which of the following statements is MOST accurate regarding warrants?
A. Warrants give an investor the right to buy shares of a security at a particular
price.
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, FINRA SERIES 7 Exam
B. Warrants are typically issued to employees of a corporation.
C. Warrants cannot be traded as a separate security.
D. Warrants must always be given to investors during an initial public offering. -
ANSWER-A. Warrants give an investor the right to buy shares of a security at a
particular price.
Regarding call options and put options, which of the following is true:
I A put option is in the money when the stock price is below the exercise price.
II A put option is in the money when the stock price is above the exercise price.
III A call option is in the money when the stock price is below the exercise price.
IV A call option is in the money when the stock price is above the exercise price.
A. I, IV
B. II,III
C. II, IV
D. I,III - ANSWER-A. I, IV
When a bond's call price is higher than its par value, this is known as a:
A. call yield
B. call bonus
C. call premium
D. call feature - ANSWER-C. call premium
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, FINRA SERIES 7 Exam
Your client purchased 100 shares of XOM at 60, and the stock now trades at $75.
The client is bullish on the stock but is concerned about a dip in the market. To
protect his gains, you recommend
A. selling the 100 shares.
B. buying an XOM call.
C. selling an XOM call.
D. buying an XOM put. - ANSWER-D. buying an XOM put.
STRIPS may be attractive to investors for which of the following reasons?
A. They offer semi-annual interest payments
B. The securities are tax-free until they mature
C. They carry almost no reinvestment risk
D. They are offered at only a 20 year maturity which is a maturity that is not
offered by traditional Treasury securities - ANSWER-C. They carry almost no
reinvestment risk
The Alternative Minimum Tax (AMT):
A. Adds back in certain "tax preference items" that are deducted for purposes of
regular income tax
B. Is designed to ensure that residents of states with high taxes do not pay more
tax as a percentage of income than residents of states with lower taxes
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FINRA SERIES 7 EXAM NEWEST 2025/2026 WITH COMPLETE
QUESTIONS AND CORRECT ANSWERS |ALREADY GRADED
A+||BRAND NEW VERSION!
A customer is holding 1000 shares of ABC Co. stock. The price of ABC's stock has
risen since she purchased it. She wishes to hedge her position while generating
additional income. Which of the following best accomplishes her goals?
A. Buy 10 calls on ABC
B. Write 10 calls on ABC
C. Buy 10 puts on ABC
D. Write 10 puts on ABC - ANSWER-B. Write 10 calls on ABC
Which is not one of FINRA's activities?
A. Operating and maintaining BrokerCheck
B. Overseeing the liquidation of bankrupt broker-dealers
C. Investigating its members and their associated persons for compliance with
securities law
D. Establishing rules governing OTC securities - ANSWER-B. Overseeing the
liquidation of bankrupt broker-dealers
A registered associate of a broker-dealer recommends a fairly conservative "bond
plus" strategy to clients. It involves the purchase of a zero-coupon Treasury that
will be worth a certain amount at maturity, and the purchase of equity index
1|Page
, FINRA SERIES 7 Exam
options with the remaining funds. The representative tells clients that the strategy
cannot lose money. Which of the following statements is true?
A. The principal value at maturity of zero coupon Treasuries is uncertain.
B. Because Treasury securities are guaranteed by the federal government, the
representative is technically correct.
C. The representative cannot make this guarantee against loss.
D. The strategy is risky because it involves options. - ANSWER-C. The
representative cannot make this guarantee against loss.
What does a transfer agent do?
A. Records who owns securities and in what form, and creates physical stock
certificates when needed
B. Repays bondholders when their bonds mature
C. Audits the recording of securities ownership and makes sure issued shares of
stock do not exceed authorized shares
D. Manages the process of issuing stocks or bonds, including marketing and selling
them - ANSWER-A. Records who owns securities and in what form, and creates
physical stock certificates when needed
Which of the following statements is MOST accurate regarding warrants?
A. Warrants give an investor the right to buy shares of a security at a particular
price.
2|Page
, FINRA SERIES 7 Exam
B. Warrants are typically issued to employees of a corporation.
C. Warrants cannot be traded as a separate security.
D. Warrants must always be given to investors during an initial public offering. -
ANSWER-A. Warrants give an investor the right to buy shares of a security at a
particular price.
Regarding call options and put options, which of the following is true:
I A put option is in the money when the stock price is below the exercise price.
II A put option is in the money when the stock price is above the exercise price.
III A call option is in the money when the stock price is below the exercise price.
IV A call option is in the money when the stock price is above the exercise price.
A. I, IV
B. II,III
C. II, IV
D. I,III - ANSWER-A. I, IV
When a bond's call price is higher than its par value, this is known as a:
A. call yield
B. call bonus
C. call premium
D. call feature - ANSWER-C. call premium
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, FINRA SERIES 7 Exam
Your client purchased 100 shares of XOM at 60, and the stock now trades at $75.
The client is bullish on the stock but is concerned about a dip in the market. To
protect his gains, you recommend
A. selling the 100 shares.
B. buying an XOM call.
C. selling an XOM call.
D. buying an XOM put. - ANSWER-D. buying an XOM put.
STRIPS may be attractive to investors for which of the following reasons?
A. They offer semi-annual interest payments
B. The securities are tax-free until they mature
C. They carry almost no reinvestment risk
D. They are offered at only a 20 year maturity which is a maturity that is not
offered by traditional Treasury securities - ANSWER-C. They carry almost no
reinvestment risk
The Alternative Minimum Tax (AMT):
A. Adds back in certain "tax preference items" that are deducted for purposes of
regular income tax
B. Is designed to ensure that residents of states with high taxes do not pay more
tax as a percentage of income than residents of states with lower taxes
4|Page
