NEW FINRA SERIES 7 EXAM WITH Q&A TESTED
AND APPROVED!!!
An interval fund is a type of investment company that is:
A. Redeemable at any time
B. Must be purchased in periodic intervals
C. Highly liquid
D. Legally classified as a closed-end fund -- ANSWER--D. Legally classified as a closed-end
fund
Interval funds are a type of investment company that offers higher yields but permits
shareholders to sell their shares only at specific time periods or "intervals." Legally classified
as a closed-end fund, interval funds share characteristics with mutual funds such as the fact
that there is no trading or secondary market for interval funds; instead shares must be
purchased and sold (redeemed) with the fund. An investment in an interval fund is much less
liquid than shares in other types of investment companies, such as mutual funds, closed-end
funds, and ETFs.
Which of the following would you be the least interested in looking at to analyze a revenue
bond?
A. Flow of funds
B. Net overall debt per capita
C. Protective covenants
D. Feasibility study -- ANSWER--B. Net overall debt per capita
Page 1 of 56
,Joanna is a registered representative who works from her vacation home occasionally. What
is the maximum number of business days she can work from her vacation home without it
being classified as a branch office?
A. Less than 50
B. Less than 20
C. Less than 30
D. Less than 60 -- ANSWER--C. Less than 30
A trade confirmation must be sent on or before the settlement date in all of these instances
except?
A. Customer purchases shares in a dividend reinvestment plan
B. Customer purchases a when-issued municipal
C. Customer is at office when trade takes place and sees it
D. Customer sells a mutual fund -- ANSWER--A. Customer purchases shares in a dividend
reinvestment plan
A customer must receive a trade confirmation for most transactions. For dividend
reinvestment plans, a quarterly account statement may replace an immediate trade
confirmation with advance written notice to the customer. The account statements should
disclose all the information required in a normal confirmation for each purchase, sale,
redemption, or investment that took place in the account during the reporting period.
Page 2 of 56
,Carlos, age 58, is in the 25 percent marginal income tax bracket. If he takes a $10,000
distribution from his IRA to pay off credit card debt, how much money will he receive after
taxes and any penalties are taken into account?
A. $6,750
B. $7,500
C. $10,000
D. $6,500 -- ANSWER--D. $6,500
For a REIT to qualify with the IRS, which of the following must be true?
A. It must have a minimum of 100 shareholders, and it must distribute at least 90% of its
income to those shareholders
B. At least 90% of its gross income must be real estate related, and 95% of that gross income
must come from real estate sources and dividends or interest from any source
C. At least 75% of its total assets must be invested in real estate, and it must distribute at least
95% of its income to its shareholders
D. It must be managed by a board of directors or trustees, and at least 90% of its total assets
must be invested in real estate -- ANSWER--A. It must have a minimum of 100
shareholders, and it must distribute at least 90% of its income to those shareholders
A corporate bond has a coupon rate of 2.75%. What is the amount of a single semiannual
interest payment?
Page 3 of 56
, A. $13.75
B. $27.50
C. $275.00
D. $137.50 -- ANSWER--A. $13.75
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
C. Affects both corporate and individual income tax
D. Requires affected taxpayers to calculate their income tax in two ways and pay the lower
amount -- ANSWER--A. Adds back in certain "tax preference items" that are deducted for
purposes of regular income tax
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
A wash sale occurs when:
Page 4 of 56
AND APPROVED!!!
An interval fund is a type of investment company that is:
A. Redeemable at any time
B. Must be purchased in periodic intervals
C. Highly liquid
D. Legally classified as a closed-end fund -- ANSWER--D. Legally classified as a closed-end
fund
Interval funds are a type of investment company that offers higher yields but permits
shareholders to sell their shares only at specific time periods or "intervals." Legally classified
as a closed-end fund, interval funds share characteristics with mutual funds such as the fact
that there is no trading or secondary market for interval funds; instead shares must be
purchased and sold (redeemed) with the fund. An investment in an interval fund is much less
liquid than shares in other types of investment companies, such as mutual funds, closed-end
funds, and ETFs.
Which of the following would you be the least interested in looking at to analyze a revenue
bond?
A. Flow of funds
B. Net overall debt per capita
C. Protective covenants
D. Feasibility study -- ANSWER--B. Net overall debt per capita
Page 1 of 56
,Joanna is a registered representative who works from her vacation home occasionally. What
is the maximum number of business days she can work from her vacation home without it
being classified as a branch office?
A. Less than 50
B. Less than 20
C. Less than 30
D. Less than 60 -- ANSWER--C. Less than 30
A trade confirmation must be sent on or before the settlement date in all of these instances
except?
A. Customer purchases shares in a dividend reinvestment plan
B. Customer purchases a when-issued municipal
C. Customer is at office when trade takes place and sees it
D. Customer sells a mutual fund -- ANSWER--A. Customer purchases shares in a dividend
reinvestment plan
A customer must receive a trade confirmation for most transactions. For dividend
reinvestment plans, a quarterly account statement may replace an immediate trade
confirmation with advance written notice to the customer. The account statements should
disclose all the information required in a normal confirmation for each purchase, sale,
redemption, or investment that took place in the account during the reporting period.
Page 2 of 56
,Carlos, age 58, is in the 25 percent marginal income tax bracket. If he takes a $10,000
distribution from his IRA to pay off credit card debt, how much money will he receive after
taxes and any penalties are taken into account?
A. $6,750
B. $7,500
C. $10,000
D. $6,500 -- ANSWER--D. $6,500
For a REIT to qualify with the IRS, which of the following must be true?
A. It must have a minimum of 100 shareholders, and it must distribute at least 90% of its
income to those shareholders
B. At least 90% of its gross income must be real estate related, and 95% of that gross income
must come from real estate sources and dividends or interest from any source
C. At least 75% of its total assets must be invested in real estate, and it must distribute at least
95% of its income to its shareholders
D. It must be managed by a board of directors or trustees, and at least 90% of its total assets
must be invested in real estate -- ANSWER--A. It must have a minimum of 100
shareholders, and it must distribute at least 90% of its income to those shareholders
A corporate bond has a coupon rate of 2.75%. What is the amount of a single semiannual
interest payment?
Page 3 of 56
, A. $13.75
B. $27.50
C. $275.00
D. $137.50 -- ANSWER--A. $13.75
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
C. Affects both corporate and individual income tax
D. Requires affected taxpayers to calculate their income tax in two ways and pay the lower
amount -- ANSWER--A. Adds back in certain "tax preference items" that are deducted for
purposes of regular income tax
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
A wash sale occurs when:
Page 4 of 56
