FINRA Series-7 Dumps

$956.88. The price of 95.22 means 95 and 22 / 32. One thirty-second of a $1,000 bond with a par of 100.00 is $0.3125. Twenty-two thirty-seconds is therefore about $6.88. The 95 is the percentage of one bond with a par value of $1,000. Multiplying 95% by $1,000 equals $950. Adding $6.88 plus $950 equals $956.88.

$53. The breakeven price on the call is the premium plus the strike price. Since the premium is $3 per share, the breakeven price is $53.

in a community property state a married woman must open a brokerage account with her husband. All of the other choices are true. Only choice A is “not” true.

moral obligation. The lack of a legally binding obligation removes the issue from the general obligation category. Although defaults are possible, it is usually held that no state legislature would allow a moral obligation issue to default.

the names of the underwriting syndicate members. At the time the notice of sale is published, the syndicate has generally not been formed. All the other information is required.

liquidate the securities or otherwise cancel the transaction. Reg T requires the position closed if the customer fails to comply with the rules. An extension may be granted, but not by the member firm. Only an exchange or the FINRA grants extensions for bona fide reasons.

short-term cash needs. Notes are generally used for short-term needs.

a SIMPLE. IRAs are for any individuals, not just small employers. The other choices do not exist.

prospectus contains the significant facts about the issue. The SEC never approves of guarantees an issue. It only attempts to verify that sufficient information is disclosed in the prospectus.

a custodian under UGMA. The Uniform Gifts to Minors Act requires securities registration in the name of the custodian for the benefit of the minor. A margin account does not qualify because such an account has all securities registered in street name.

a guaranteed corporate bond. All of the other securities are obligations of the US government, which is considered to have minimal or no risk.

FRB. The Federal Reserve Board sets the initial margin deposit requirements. The NYSE set the ongoing minimum equity requirements.

open-end investment companies. The term is generally applied to open-end investment companies.

$100 profit. The long position in the June call is a $200 profit ($1,200 - $1,000). The short position in the March call is a $300 loss ($900 - $300). Combining the gain and loss results in a $100 loss.

amortized over the life of the bond resulting in no loss at maturity. For tax purposes, premiums are amortized over the life of the bond. Some amount is taken each year.

six months after the date of death. A second evaluation is made six months from the date of death. The estate may then use either value in determining estate tax.

equally to all CMO holders of any tranche. All bondholders share equally in the interest payments. Only principal payments are directed to the owners in each tranche in sequential order.

must deposit the full purchase cost before an order is executed. A “frozen” account is restricted to full cash payment in advance for any purchase.

Regulation T. Because this regulates brokers extending credit to customers, it is important to the securities industry but does not have an extensive effect on the general economy.

$1,000. This is the minimum denomination. Normally, US treasury bonds are in much larger denominations.

the current market for the stock. FINRA rules require the markup to be based upon the current market price.

$3,900. The requirement for short accounts is 30% of the current market value. The market value is $13,000 ($28,000 - $15,000). Multiplying by 30% equals $3,900.

it may be entered. In a joint account any tenant is empowered to enter orders, which is specified in the account agreement.

both A and B. Brokers generally operate as agents attempting to locate buyers or sellers for bond dealers. They do not trade for their own accounts or deal directly with individual investors.

the holders of common stock and the holders of preferred stock. The holders of all classes of stock are the owners. Each stock class has separate privileges, but all represent ownership. Even if the government is an owner, it holds shares of stock.

face value. The price is 100.00 if the yield is the same as the coupon rate. A price of less than 100.00 means the yield is higher than the coupon rate. A price of more than 100.00 means the yield is lower than the coupon rate. The prices are a percentage of 100.00. However, treasury bonds and municipal bonds are not quoted in this way.

90 days. Interest accrues from the coupon date to the settlement date. A regular way purchase on April 12 will settle on April 15. corporate bonds are figures on 30-day months, regardless of the actual number of days in the month. The year is considered 360 days. Therefore, interest is calculated for 16 days in January plus 30 each for February and March plus 14 for April.

$180,000. Subtract current liabilities from current assets. Current liabilities are $170,000 ($460,000 - $290,000).

rate of return. Because T-bills pay no interest, Bubba’s rate of return is the discount as a percentage of the face value he receives at maturity.

270 days. A characteristic of commercial paper is relatively short duration, normally not exceeding 270 days.

when the new issue of securities is purchased pursuant to a best effort basis. All the other choices are allowable under the rule “except” this one.

$3.75. Three-eighths of a $1,000 bond with a par price of 100.00 equals $3.75.

US Treasury bill. T-bills are quoted by yield. Therefore, the bid is higher than the asking price. A higher yield means a lower price.

five years. The five-year holding period begins on the first day of the year for which contributions were made.

the underwriting spread is greater than the selling concession. The underwriting spread (or “gross spread”) is the difference between the price paid to the issuer and the public offering price. The selling concession is the amount that the managing underwriter gives to dealers in the selling group. The reallowance is the amount that underwriters give to other dealers and is less than the selling concession.

after approval by a majority vote of the shareholders. All vital interests of the shareholders are subject to their majority vote.

without restriction. A SEP-IRA may be converted to a Roth IRA. The two-year holding period applies to SIMPLE-IRAs.

not do so under any circumstance. New issues may not be distributed to Bubba or members of his immediate family.

all of the above. All are sources of funds for limited partnerships along with non -recourse loans.

Series EE bonds. Because Series EE bonds are not negotiable, they have no collateral value. They cannot be sold back to the US government.

White’s. White’s ratings are based on trading market data as opposed to the financial data of the issue, which is used by Moody’s as well as S&P.

Regulation U. Regulation T is the extension of credit by broker/dealers. Reg U relates to the extension of credit by banks on securities.

authorized for inclusion in the NASDAQ system. Stocks listed on an exchange have no more than three characters in their symbols.

the purchase of one fund would probably be made at a break point allowing more dollars to be invested in fund shares. There is nothing inherently unsuitable about recommending three different funds. However, in most cases, a single fund offers satisfactory diversification and can be purchased with a reduction in sales charge.

all of the above are required. An intrastate offering under Rule 147 requires qualification under all of these conditions.

4%. The dividend is $1.20 per share ($6 x 20%). Divide this by the stock price to obtain the yield.

treasury bills. The most prudent investment provides the cash in the six-month short-term period. Common and preferred stock are subject to significant price uncertainty. US treasury issues provide the most safety of principal. Treasury bonds have longer maturities than the six-month terms available for treasury bills.

$10. A point is 1% and bonds are priced in $1,000 increments. Multiplying $1,000 by 1% equals $10.

owned by the members of the syndicate. In a firm commitment the underwriter buys the securities from the issuing company. If they don’t sell to the public, they are owned by the underwriters.

bylaws. The bylaws of a condominium association provide general details about management.

European style. These options can only be exercised at the expiration date while American style options can be exercised at any time prior to expiration.

public utility companies. Interest rates most affect the companies with the greatest amount of debt. Public utility companies are highly leveraged. Hence, they most likely incur the largest effect of rising interest rates.

unit investment trust company. This is an example of a fixed trust, which is a type of unit investment trust.

furnish written documents of authority to the brokerage firm executing the orders. The wealthy investor has simply given Bubba discretion over the account. The brokerage firm only requires evidence that this authority has been granted to Bubba.

they are issued in denominations of $1,000 to $1,000,000. Remember, the question asks what is “not” true. The smallest denomination for a US treasury bill is $10,000.

$400,000. In an Eastern account, liability remains open until the entire syndication is closed. Therefore, Big Easy has a liability for 10% of the unsold portion. Since the unsold portion is $6 million, the liability for Big Easy is 10% of that amount, which is $400,000.

a private placement. Normally, private placements are conducted with an investment letter.

all of the above. All of the choices are required information for the registered representative to obtain.

25% of employee compensation. There is also a dollar cap that is has an annual cost-of-living adjustment.

purchase any IPO security provided the plan is not sponsored solely by a broker/dealer. An ERISA plan that is qualified under Section 401(a) may purchase any IPO security provided that the plan sponsor is not a broker/dealer.

$13,350. Munis are not subject to Reg T. The NYSE maintenance requirement on munis is the greater of 15% of the market value or 7% of the principal amount.

a best efforts offering. With a best efforts offering the investment banker does not make any guarantee that all the offered securities will sell. The investment banker pays for only those securities that are actually sold and returns unsold shares to the issuer.

general obligation. A limited tax bond is generally classified as general obligation.

may be levied only if the charge if fair, reasonable, and non-discriminatory. This is the standard in the FINRA rules.

5.88%. The current yield is the annual interest divided by the price. The bond will pay $50 of interest per year ($1,000 face amount times 5%). Dividing by the price of $850 equals 5.88%.

the point at which income exceeds deductions. This is the definition of “crossover”.

the custodian may perform an essential clerical service for the fund and its shareholders. The custodian holds the cash and securities of the investment company and performs the bookkeeping functions. It does not have a supervisory role.

the issuing municipality. The issuer pays for the attorney.

commodities account in Bubba’s name only. SIPC does not cover commodities accounts.

investment advisor. The custodial bank is usually also selected for other functions, but not as investment advisor. That assignment is generally performed by a special advisory firm or the mutual fund management company.

$3,000. The purchase requires $5,000 ($10,000 x 50%). Since the existing SMA is $2,000 Bubba only needs to deposit the remaining $3,000.

net asset value and redemption price. Investors redeeming shares of mutual funds receive the net asset value.

all of the above. A profit sharing plan has tax deductible contributions and is designed to provide a retirement plan for participants. Income in the plan is tax-free until withdrawn.

lending the fund’s securities to banks or broker/dealers. This practice is not permitted under federal law.

$6.19. The fund has a redemption fee of 1%. This is about 6 cents based upon the bid price. Subtracting that from the $6.25 bid results in $6.19.

the company files regular financial data with the SEC. Rule 144 transactions may use either agency or principal methods.

up to but not including the settlement date. Accrued bond interest is always calculated up to but not including the settlement date. The interest accrual begins on the coupon date.

acts as an agent for the issuer. In a best efforts offering the investment banker acts as an agent for the issuer and makes no guarantee about selling the securities.

expense ratio. Custodial fees are negligible and the sales charge is a one-time expense. The “best” reflection of mutual fund costs is the expense ratio.

it includes a markup. A market-maker acts as principal. Therefore, Bubba pays a markup but not a commission.

all of the above. All of the choices are normal ways for the broker to fill the customer’s order.

the FINRA Board of Governors. The first appeal is to the Board of Governors, then to the SEC, and then to the federal courts.

expected average life. The average life of a CMO is the length of time that each dollar of invested principal is expected to remain outstanding. Pricing of CMOs is based upon this factor.

Securities Investor Protection Act of 1970. SIPC was established under this act.

financing charges. In a triple net lease, the tenant is responsible for taxes, insurance, and maintenance.

6 rights per share. Each share receives a right and there are six million shares receiving rights to one million new shares. So six rights are required for one share.

regulation of new issues of securities. The first two choices are covered in the Securities and Exchange Act of 1934.

an open-end investment company. By definition, open-end funds may not issue senior securities. They only issue “voting stock”.

if it does not exceed $1,000. If the net amount due is less than $1,000 no action is required under Reg T.

certificates of deposit. CDs trade with “accrued interest” as part of the price.

change the bid. A workable bid indicates a price level where a dealer is willing to negotiate business. It is not a firm bid and may be changed before becoming firm.

low risk. The low risk is a consequence of the government guarantee or subsidy.

it limits deductions to the amount at risk. Deductions may not exceed contributed capital.

a contractual plan. The other choices are not suitable. In a voluntary accumulation plan, the load is level. In an automatic withdrawal plan, the load is front -end because the bulk of the sales charge is taken early in the life of the plan.

$10. There are one million shares divided into the $10 million of new capital.

under no circumstances. The representative may send the red herring but not a research report of his firm.

net tangible asset value per share. Book value is much easier to say.

trading in outstanding issues. Secondary market transactions involve trading in securities after the original issue is made. When an issuer offers new securities to the public it is a “primary offering”.

both B and C. The 200,000 shares are sold on behalf of the affiliated person so the proceeds go to that individual. Only the other 300,000 shares are a primary offering.

earnings retained after payment of dividends to shareholders. The other choices are clearly incorrect. Earned surplus is also referred to as retained earnings.

subject to federal income tax but exempt from state income tax. The interest on US government securities is taxed by the US government but not by state governments. The opposite is true of bonds issued by a state, which are exempt from federal tax but subject to state taxes -except for taxes of the state that issues them.

breakpoint. This is the dollar value at which the sales charge is reduced.

trademarks. Intangible assets are those whose true value cannot be determined, but there is some supposed market value.

the Saturday following the third Friday of the expiration month. It is NOT the third Saturday. The final day to trade options is the third Friday of the expiration month. The options expire the next da y.

margin account. A margin account is required for short sales.

one specific municipal project plus the full financial strength of the issuer. Double -barreled bonds are first payable from a specific project, but are further guaranteed by the issuing municipality.

$200. Since XYZ is trading at 72, a November 65 call has an intrinsic value of $700. A sale at that value compared to the cost of $300 is a profit of $400. Subtract the loss of $200 on the expired put to obtain the profit of $200.

a legal authority created for this purpose. Bonds with a leaseback arrangement are issued by a specially created entity.

machinery and pipe. These are tangible fixed assets and not associated with intangible drilling costs.

500 votes. Under cumulative voting, the number of directors is multiplied by the number of shares owned. The votes may be cast all for a single director or divided in any manner among the directors.

refuses the order. Reg T requires that under these circumstances the account must be frozen for 90 days. Any trade prior to that, requires cash in advance.

residential property not used for business. Depreciation is only permitted on income-producing property.

premium. The price of closed-end investment companies is determined by trading of their shares in the open market. The price may be a discount to net asset value or a “premium” above net asset value.

withholding blocks of a new issue in the member’s account. Underwriters and selling group members are prohibited from keeping blocks of a new issue for their own accounts.

balanced. These funds invest for growth with stock and income with bonds.

six million. One right for each outstanding share is distributed.

a holding company dealing in mineral leaseholds. The other choices are the three classifications of investment companies under the 1940 act.

it is unchanged. The debentures add to liabilities and to cash (an asset) received from the sale. There is no effect on net worth.

breakout. An upward move through a resistance level that is confirmed by heavy volume is called a breakout.

predictions of recession in the economy. All of the other choices are technical market indicators. An economic forecast is “fundamental” market data.