Series 7 Top-Off Exam Economics
Questions And Answers 2023-2024
Which keeps track of the owner and physical location of every stock held by a
... [Show More] brokerdealer? - ANS-Securities Record
Blotters - ANS-Daily records containing itemized reports of all purchases and sales of
securities, receipts and deliveries of certificates, disbursements of cash, and all other
debits and credits
General Ledger - ANS-This ledger includes records of all assets and liabilities, income
and expenses, and capital accounts.
Customer ledgers - ANS-These ledgers itemize each cash and margin account of every
customer. They must include a detailed record of all credits and debits made on each
account.
For spreads, both options are? - ANS-the same
Debit spread means? - ANS-The investor pays more for the one option than he did for
the other.
Which type of risk is most directly tied to an investment's overall marketability? - ANSLiquidity risk
A stock's market value is? - ANS-The price at which it is trading on the secondary
market.
Public Offering Price is only relevant when a mutual fund client is considering
purchasing which type of shares? - ANS-A-Shares. B-Shares and C-Shares are sold at
Net Asset Value (NAV) not POP.
An investor who has consistently bought shares of a company each year over time and
now wants to minimize their tax bill should use which cost basis method? - ANSSpecific Identification.
When it comes to the primary municipal offering, which of the following puts must
restrictions on the issuer and why: competitive sale, private placement, negotiated sale
or all of the above? - ANS-A competitive sale puts the most restrictions on the issuer
because the voting public has to pass a bond resolution. In addition, there are
restrictions on who the issuer can choose as an underwriter. The issuer must choose
the underwriter who offers the bid with the lowest Net Interest Cost (NIC).
A buyer of a put option can ONLY close out the put by? - ANS-1) Selling the put
2) Letting the put expire
3) Exercising a put
NOTE: Buying a call does not close out a put option.
What keeps track of broker-dealer's transactions on a particular day? - ANS-Blotters.
Any location where ___________ takes place requires proper supervision by a principal
and is considered a(n) __________________? - ANS-Office of Supervisory Jurisdiction.
Inherited assets receive a stepped up cost basis based on their market value at the time
of the prior owner's death. Capital gains and losses from inherited assets are treated as
long or short term capital gains/losses? - ANS-Long term, regardless of how long the
asset was held.
Patrick has recently been laid off. He is a single father with a daughter in college and a
son in high school. Patrick owns his come and has a portfolio consisting of $350,000 in
equities, $250,000 in municipal bonds and $200,000 in CDs. He believes that it will take
him up to a year to find a new job. To support himself and his family, what would be the
best course of action and why? - ANS-Sell the municipal bonds because they offer tax
free income which is great for high income taxpayers but not as valuable to someone
like Patrick who, for now at least, has no earned income. If he redeems the CDs he will
probably have to pay early redemption penalties and if he feels the equities he will likely
have to pay capital gains taxes.
10 bond points on a corporate bond is equivalent to? - ANS-$100. A "point" is an
abbreviated term for "one percentage point" of the par value.
Under Rule 137, a broker-dealer can publish a research report about securities without
it being considered an offer to sell if? - ANS-It is not participating and does not plan to
participate int he offering, and is not being compensated by the issuer or any participant
in the offering.
Under Rule 138, even if the broker-dealer is a participant in the offering, it may publish a
research report on a different security of the issuer's if? - ANS-The issuer is a reporting
company that has been current in its SEC filings over the previous 12 months. The
offering must be for one of the following two categories of securities, and the research
report must be about the other category:
1) Common stock, debt securities convertible into common stock, or preferred stock
convertible into common stock.
2) Non-convertible debt securities or non-convertible non-participating preferred stock.
What is the amount of time between when FINRA renders a default decision and when
the sanctions imposed by the decision become effective? - ANS-25 days.
Which type of bond may have a statutory debt limit? - ANS-A General Obligation bond
because since they are ultimately funded through taxation, there are usually restrictions
placed on the amount and terms of the debt that can be issued.
Which of the following is NOT a qualified retirement plan covered by ERISA and why:
SEP IRA, Deferred Compensation Plan, Defined Benefit Plan, Pension and ProfitSharing Plan? - ANS-Deferred compensation plans because they can discriminate
among classes of employees, which plans covered by ERISA are not permitted to do.
If the recommendation that appears in a retail communication is for an equity security
then the communication must contain? - ANS-The price of the security at the time the
recommendation is made.
Which of the following are not permitted in an IRA account: Municipal Bond, Options,
Whole Life Insurance Policy, Growth Stock? - ANS-A whole or term life insurance
policy, as well as a variable life insurance policy, is specifically prohibited from inclusion
in an IRA.
Options are issued and guaranteed by? - ANS-The Options Clearing Corporation
(OCC).
The breakeven points for straddles are found by? - ANS-Adding the two premiums paid
and then adding and subtraction the sum from the strike price (the high number and the
low number become your break even in either direction).
Which of the following earns income that is NOT taxable at the state level: CDs, Federal
Agency Securities like Fannie May and Freddie Mac, Corporate Bonds, Treasury Bills
and Treasury Bonds? - ANS-Treasury bills and bonds are only subject to federal taxes.
How do you determine cost basis and holding period on gifted securities? - ANS-When
someone gives securities as a gift to another individual, the recipient's cost basis is the
lower of (1) the giver's cost basis or (2) the fair market value at the time fo the gift. The
giver's holding period will correspond to the cost basis.
Which of the following are qualified corporate retirement plans: Pension Plan, ProfitSharing Plan, Payroll Deduction Plans, Deferred Compensation Plans? - ANS-Pension
plan and Profit-sharing plans are qualified retirement plans that "qualify" for taxdeductible contributions.
A firm is subject to a complaint issued by FINRA's Dept of Enforcment. The firm
answers the complaint. The Hearing Officer may schedule a rehearing conference
within how many days? - ANS-21 days.
A registered person planning on participating in a private securities transaction must
include what in his written notice to his member firm prior to participating? - ANS-The
details of the proposed transaction, his role in the transaction, and whether or not he will
receive any selling compensation as part of his participation. The date he begins his
participation in the transaction may be included but is not necessary.
Continues... [Show Less]