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Series 7 General Securities Representative Qualification Examination (GS) Questions and Answers

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Viewing questions 11-20 out of questions

Questions # 11:

FINRA advertising standards permit a dealer to state that a CMO has an implied AAA rating if the securities are issued:

Options:

with an average life no longer than ten years

by a US government agency

by a private issuer who has not yet received an expected AAA rating

in amounts less than $1,000,000

Answer

Explanation

by a US government agency. Since government agencies do not apply for ratings, it is permissible to state that its issues have an “implied AAA rating”. Private issuers must receive a rating in order to state it in advertising.

Questions # 12:

In a triple net lease, which of the following is the tenant not responsible for paying?

Options:

taxes

financing charges

insurance premiums

maintenance

Answer

Explanation

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

Questions # 13:

Which of the following statements incorrectly describes US securities markets?

Options:

a capital market comprised of long-term debt and equity issues

a money market comprised of short-term debt and equity issues

a municipal market comprised of tax-exempt issues of state and local governments

a government and agency market comprised of both short-term and long-term debt issues

Answer

Explanation

a money market comprised of short-term debt and equity issues. This is the statement that is “incorrect”. Equity issues are not traded in the money market, which consists only of high-quality short-term debt securities.

Questions # 14:

In which of the following is not a case where a deed to a condominium qualifies as a security?

Options:

the seller intends to profit

there is management by someone other than the owner

there is a time and space rental pool

there is a 14-day owner usage provision

Answer

Explanation

there is a 14-day owner usage provision. This provision is unrelated to qualification as a security.

Questions # 15:

Which of the following are direct obligations of the US government?

Options:

Import-Export bank bonds

Series EE bonds

Farm Credit System bonds

both B and C

Answer

Explanation

Series EE bonds. Import-Export bank bonds and Farm Credit System bonds are not direct obligations of the United States.

Questions # 16:

A management group may serve an investment company as its:

Options:

underwriter

custodian

investment advisor

both A and C

Answer

Explanation

both A and C. The custodian must be independent of the investment company.

Questions # 17:

Prospective bidders for a municipal bond being issued should consult what document for relevant procedures?

Options:

the Eastern account agreement

the official notice of sale

the offering circular

the SEC Registration Statement

Answer

Explanation

the official notice of sale. All bid requirements are found in the official notice of sale.

Questions # 18:

Customers who engage in increased activity of wiring money from their account could indicate which of the following activities?

Options:

Interpositioning

Churning

Crossing

Money laundering

Answer

Explanation

money laundering. Potential money laundering activities include excessive wiring of money between accounts.

Questions # 19:

Which of the following types of investment companies pays out 90% of its net investment income to shareholders?

Options:

diversified

registered

regulated

balanced

Answer

Explanation

regulated. Investment companies regulated by the Internal Revenue Code Subchapter M are required to pay out a minimum of 90% of their net income annually to their shareholders.

Questions # 20:

Bubba opens a margin account and sells short 100 shares of XYZ at $50. Assuming a Reg T requirement of 50%, what is the opening balance in Bubba’s account?