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FINRA Series 7
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Question 1 of 10
1. Question
Which of the following term relates to a pair of options transactions an investor makes at the same time and on the same security is:
Correct
A spread is a pair of options transactions an investor makes at the same time and on the same security. Investors use straddles to protect their positions and to take advantage of discrepancies in options pricing.
Incorrect
A spread is a pair of options transactions an investor makes at the same time and on the same security. Investors use straddles to protect their positions and to take advantage of discrepancies in options pricing.
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Question 2 of 10
2. Question
The one who is involved in the solicitation, purchase, or sale of securities other than municipal securities, option securities, etc. can register as which of the following:
Correct
A representative associated with a member may register as a Limited Representative – Corporate Securities if he has passed a corresponding Qualification Examination and his activities involve the solicitation, purchase, or sale of securities other than municipal securities, option securities, redeemable securities, variable contracts of certain insurance companies, and direct participation programs.
Incorrect
A representative associated with a member may register as a Limited Representative – Corporate Securities if he has passed a corresponding Qualification Examination and his activities involve the solicitation, purchase, or sale of securities other than municipal securities, option securities, redeemable securities, variable contracts of certain insurance companies, and direct participation programs.
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Question 3 of 10
3. Question
Which of the following spread is used by an investor who’s bearish, purchasing a higher-priced option and selling a lower-priced option:
Correct
A debit spread is a spread used by an investor who’s bearish, purchasing a higher-priced option and selling a lower-priced option.
Incorrect
A debit spread is a spread used by an investor who’s bearish, purchasing a higher-priced option and selling a lower-priced option.
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Question 4 of 10
4. Question
In any spread, the person who sells the lower strike price and buys the higher strike price is related to which of the following:
Correct
In any spread, the person who sells the lower strike price and buys the higher strike price is bearish, and the investor who sells the higher strike price and buys the lower strike price is bullish.
Incorrect
In any spread, the person who sells the lower strike price and buys the higher strike price is bearish, and the investor who sells the higher strike price and buys the lower strike price is bullish.
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Question 5 of 10
5. Question
_______ is a kind of spread where the investor either purchases a call and a put or sells a call and a put, with both having the same expiration date and strike price.
Correct
Straddles are a kind of spread where the investor either purchases a call and a put or sells a call and a put, with both having the same expiration date and strike price. An investor who expects a stock’s price to move up or down substantially, but isn’t sure which way it will go, will use a long straddle by buying a call and a put.
Incorrect
Straddles are a kind of spread where the investor either purchases a call and a put or sells a call and a put, with both having the same expiration date and strike price. An investor who expects a stock’s price to move up or down substantially, but isn’t sure which way it will go, will use a long straddle by buying a call and a put.
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Question 6 of 10
6. Question
Which of the following are similar to straddles, except that they don’t necessarily involve an identical expiration date and strike price?
Correct
Combinations are similar to straddles, except that they don’t necessarily involve an identical expiration date and strike price.
Incorrect
Combinations are similar to straddles, except that they don’t necessarily involve an identical expiration date and strike price.
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Question 7 of 10
7. Question
Which of the following member may register as a Limited Representative if his activities involve effecting sales as part of certain primary non-public offerings but not the sales of municipal, government, or equity interest or debt of direct participation program?
Correct
A representative associated with a member may register as a Limited Representative – Private Securities Offerings if his activities involve effecting sales as part of certain primary non-public offerings but not the sales of municipal, government, or equity interest or debt of direct participation programs. Such person also must pass a corresponding Qualification Examination.
Incorrect
A representative associated with a member may register as a Limited Representative – Private Securities Offerings if his activities involve effecting sales as part of certain primary non-public offerings but not the sales of municipal, government, or equity interest or debt of direct participation programs. Such person also must pass a corresponding Qualification Examination.
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Question 8 of 10
8. Question
According to rule 472 states that a member firm may not publish any communication which contains the following:
I. The promise of a specific result or return.
II. An exaggerated or unwarranted claim.
III. An opinion that does not have a reasonable basis.
IV. A copy of the communicationCorrect
Rule 472 states that a member firm may not publish any communication which Contains:
* An untrue statement or omission of a material fact that is false or misleading.
* The promise of a specific result or return.
* An exaggerated or unwarranted claim.
* An opinion that does not have a reasonable basis.
* A projection or forecast that is not clearly labeled as a forecast.Incorrect
Rule 472 states that a member firm may not publish any communication which Contains:
* An untrue statement or omission of a material fact that is false or misleading.
* The promise of a specific result or return.
* An exaggerated or unwarranted claim.
* An opinion that does not have a reasonable basis.
* A projection or forecast that is not clearly labeled as a forecast. -
Question 9 of 10
9. Question
Which of the following IRAs allow for tax-deductible contributions, and the investments in them grow tax-deferred, but distributions are taxed.
Correct
Traditional IRAs allow for tax deductible contributions, and the investments in them grow tax-deferred, but distributions are taxed. In other words, someone placing contributions in his Traditional IRA can deduct that amount from his taxes for that year, and he doesn’t have to pay any taxes on capital gains (or dividends, or interest income, or whatever) which his investments earn.
Incorrect
Traditional IRAs allow for tax deductible contributions, and the investments in them grow tax-deferred, but distributions are taxed. In other words, someone placing contributions in his Traditional IRA can deduct that amount from his taxes for that year, and he doesn’t have to pay any taxes on capital gains (or dividends, or interest income, or whatever) which his investments earn.
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Question 10 of 10
10. Question
Which of the following IRAS have after-tax contributions, but grow tax-free and have tax-free distributions?
Correct
Roth IRAs have after-tax contributions, but grow tax-free and have tax-free distributions. After the contributions are made, no taxes ever have to be paid on the account.
Incorrect
Roth IRAs have after-tax contributions, but grow tax-free and have tax-free distributions. After the contributions are made, no taxes ever have to be paid on the account.