Series 7 practice test

An investor buys a bond at a price below its par value. The bond is said to be trading at a:

When prevailing market interest rates rise, the prices of existing fixed-rate bonds generally:

An investor buys one call option on a stock with a strike price of 50 dollars and pays a premium of 3 dollars per share. The stock rises to 58 dollars at expiration. Ignoring commissions, what is the investor's profit per share?

An investor who is bearish on a stock and wants to profit if the stock price declines would most likely:

A customer wants an account where a brokerage firm can make investment decisions and execute trades without obtaining the customer's approval for each transaction. The customer should open a:

Under industry rules, a registered representative must report certain outside business activities to their employing firm. The primary reason for this requirement is to:

A 75-year-old retiree with a low risk tolerance and a need for steady income tells a representative she cannot afford to lose principal. The most suitable recommendation among the following is:

A municipal bond is backed by the full faith, credit, and taxing power of the issuing municipality. This type of municipal bond is a:

A company declares a dividend. The date on which an investor must own the stock to be entitled to receive that dividend is determined by the:

A bond's stated annual interest payment divided by its current market price gives the bond's:

An investor sells, or writes, a covered call. The investor owns 100 shares of the underlying stock and sells one call option against it. The primary motivation for this strategy is to:

Under the Securities Act of 1933, the document that must be provided to investors in connection with a new public offering of securities, disclosing material information about the issuer and the offering, is the:

In a margin account, a customer borrows funds from the brokerage firm to purchase securities. The interest the customer pays on the borrowed funds is based on the:

For an investor in a high federal tax bracket, the interest income from most municipal bonds is generally:

A company performs a 2-for-1 stock split. An investor who owned 100 shares worth 80 dollars each before the split will, immediately after the split, own:

Before recommending a securities transaction, a representative must have a reasonable basis to believe the recommendation is suitable based on information about the customer. This is best described as the representative's obligation under the:

U.S. Treasury bonds are considered to have essentially no credit risk primarily because they are:

A customer wants an account titled so that, upon the death of one owner, the deceased owner's share passes automatically to the surviving owner. The appropriate account registration is:

The maximum loss an investor can incur when purchasing a put option is limited to: