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  1. Home
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  3. SERIES 7

FINRA SERIES 7 Exam (page: 10)
FINRA General Securities Representative ination (GS)
Updated on: 15-Feb-2026

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SERIES 7 PDF 400 Questions

Bubba buys a US treasury bond. The interest he earns is:

  1. subject to federal and state income tax
  2. exempt from federal and state income tax
  3. subject to state income tax but exempt from federal income tax
  4. subject to federal income tax but exempt from state income tax

Answer(s): D

Explanation:

subject to federal income tax but exempt from state income tax. The interest on US government securities is taxed by the US government but not by state governments. The opposite is true of bonds issued by a state, which are exempt from federal tax but subject to state taxes -except for taxes of the state that issues them.



Which of the following does not issue debt securities that trade in the open market?

  1. Fannie Mae
  2. Freddie Mac
  3. Federal Reserve Banks
  4. Federal Land Banks

Answer(s): C

Explanation:

Federal Reserve Banks. Debt securities are not issued by Federal Reserve Banks. All of the other entities do issue debt securities.



When depositors withdraw money from savings institutions to invest in US treasury securities, this is called:

  1. the multiplier effect
  2. disintermediation
  3. reverse repo
  4. open market operations

Answer(s): B

Explanation:

disintermediation. An easier word would be preferable, but that’s the correct term.



Smart Company, Inc., has cash it intends to use in six months for purchase of equipment. The most prudent investment during the six-month period is:

  1. common stock
  2. preferred stock
  3. treasury bills
  4. treasury bonds

Answer(s): C

Explanation:

treasury bills. The most prudent investment provides the cash in the six-month short-term period. Common and preferred stock are subject to significant price uncertainty. US treasury issues provide the most safety of principal. Treasury bonds have longer maturities than the six-month terms available for treasury bills.



Which of the following is identified as a funded debt instrument?

  1. US treasury bond
  2. Series EE savings bond
  3. corporate bond
  4. Fannie Mae bond

Answer(s): C

Explanation:

corporate bond. All of the other securities are issues backed by the US government, which are not considered funded debt.



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Share your comments for FINRA SERIES 7 exam with other users:

Karan Patel 8/15/2023 12:51:00 AM

yes, can you please upload the exam?
UNITED STATES