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Series 7 Exam Review Questions
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Series 7 exam review questions are 125 multiple-choice, application-based questions designed by FINRA to test your knowledge of securities products, client suitability, and regulatory rules. They cover topics like options, bonds, mutual funds, account management, and trading, with a heavy emphasis on client scenarios and suitability.  Key Topics and Question Areas Suitability and Recommendations (91 Questions): This is the largest section, focusing on recommending appropriate investments (stocks, bonds, options, muni bonds) based on a client's risk profile, financial objectives, and tax... Show more
Series 7 Exam Review Questions
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25 Questions

1. Prior to opening a day trading account for a customer, a member shall make a reasonable effort to determine certain information about the customer, including
2. Ginny Goldtrain is a wealthy investor who is in the highest income bracket. Ginny is looking for an investment that would limit her tax liability and put her on equal footing with investors in lower income-tax brackets. Which of the following securities would you MOST likely recommend?
3. Marcella is a customer who wants to invest in securities. Which of the following is most likely to provide Terri with the highest dividend rate?
4. A principal is responsible for approving new accounts opened for
individuals
corporations
banks
trusts
5. To protect investors of variable life insurance policies who become disabled, there is a rider called a(n)
6. An investor purchased 1,000 shares of WXY at $40. If WXY announces a 5 for 4 split, what is the investor’s position after the split?
7. One of your customers is interested in investing in an oil and gas limited partnership. As their registered rep, which of the following steps are you required to take?
Prescreen the customer.
Determine the economic soundness of the program.
Explain the risks of investing in limited partnerships.
Have your customer fill out a partnership agreement.
8. Which TWO of the following are TRUE relating to a firm that sells securities out of its own inventory?
It is acting as a broker.
It is acting as a dealer.
It charges a commission.
It charges a markup.
9. James Diamond is new to investing and wants to purchase a security that will provide him with current income with minimal risk. Which of the following are you LEAST likely to recommend?
10. Use the following exhibit to answer this question:
NY CloseStrikeCalls SepCalls DecPuts SepPuts Dec
50.54012.0014.130.751.50
50.5501.002.500.881.75
50.5600.500.7510.0012.00

What is the break-even point for an investor who purchases an ABC Dec 60 put?
11. The trading volume for some large institutional orders is concealed from the public. What is this called?
12. These municipal notes provide interim financing for a municipality that’s waiting for a grant from the U.S. government.
13. One of your wealthier clients is interested in purchasing a fund. If liquidity is high on their list of investment objectives, which of the following would be the least suitable recommendation?
14. Which of the following investments are suitable for a 21-year-old investor who has limited resources but would like to start investing on a regular basis?
Growth funds
Collateralized debt obligations (CDOs)
Call options
Hedge funds
15. An investor purchases 1 LML Sep 30 call for a premium of 4. This option will expire
16. All of the following change the conditions of an option contract EXCEPT
17. Which of the following is TRUE regarding standard equity options?
Each standard contract represents 1,000 shares of the underlying security
Each standard contract represents 100 shares of the underlying security
They are exercisable European style
They are exercisable American style
18. Which of the following bonds would most likely have the highest coupon rate?
19. The largest source of backing for a local GO bond is
20. Which of the following is/are true of a REIT?
It must invest at least 75 percent of its assets in real-estate-related activities.
It must be organized as a trust.
It must distribute at least 90 percent of its net investment income.
It must pass along losses to shareholders.
21. An investor who purchases a variable life insurance policy faces which of the following risks?
22. The indenture of a corporate bond includes all of the following EXCEPT
23. All of the following can validate a mutilated certificate EXCEPT
24. Broker-dealers may charge a
commission
markup
markdown
25. Harley Securities sent Elaine a confirmation of her latest trade of Johnstone Corporation common stock. Which of the following items should be on the confirmation?
The trade date and the settlement date
Whether Harley acted as an agent or a principal
The name of the security and how many shares were traded
The amount of commission paid if Harley acted as an agent

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