Free Finra Series-7 Exam Actual Questions

The questions for Series-7 were last updated On Jan 4, 2025

Question No. 1

In a best efforts distribution of a new non-exempt issue, a broker/dealer:

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Correct Answer: D

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.


Question No. 2

Which of the following organizations usually has a prominent role in guiding investment policies of mutual funds?

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Correct Answer: B

the management group. The management group is actually comprised of the management company (including the underwriter) and the investment advisor.


Question No. 3

In what broad category of municipal bonds are ''limited tax'' bonds placed?

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Correct Answer: A

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


Question No. 4

Bubba holds 200 shares of common stock in a utility company and receives rights to subscribe to an additional 100 shares at $20. The utility company is raising $40 million of new capital.

How many shares of common stock for the utility company were outstanding prior to the rights offering?

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Correct Answer: B

4,000,000. Bubba owns 200 shares and receives rights for 100 more. The basis for the rights offering is therefore one new share for each two shares outstanding. The utility company is raising $40 million by selling shares at $20. Therefore, the company is selling 2,000,000 new shares. Since the ratio of existing shares to new shares is 2 to 1, there must be 4,000,000 presently outstanding shares.


Question No. 5

The maximum contribution an employer may make to a SEP-IRA is:

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Correct Answer: C

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