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  3. SERIES 7

FINRA SERIES 7 Exam (page: 3)
FINRA General Securities Representative ination (GS)
Updated on: 25-Dec-2025

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SERIES 7 PDF 400 Questions

Common stocks for which of the following industries are most likely to decline in value when interest rates rise?

  1. automobile manufacturers
  2. airlines
  3. stock brokers
  4. public utility companies

Answer(s): D

Explanation:

public utility companies. Interest rates most affect the companies with the greatest amount of debt. Public utility companies are highly leveraged. Hence, they most likely incur the largest effect of rising interest rates.



Convertible preferred stock has all of the following characteristics except:

  1. a lower dividend rate than non-convertible preferred
  2. a dilution of earnings if converted into common stock
  3. a requirement for shareholders to always accept the call price when called
  4. required dividend payments to shareholders before any dividends are paid to holders of common stock

Answer(s): C

Explanation:

a requirement for shareholders to always accept the call price when called. All of the other statements are true “except” this one. Convertible preferred shareholders have a n opportunity to convert to common stock. There is no forced call price.



Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

  1. 5.00
  2. 98.96
  3. 100.00
  4. 105.10

Answer(s): B

Explanation:

98.96. A calculator is not required for this. Even Bubba knows the bond is obviously trading at a slight discount by yielding 5.10% instead of the coupon rate of 5%. If the yield was the same as the coupon rate, the price is 100.00.



Bonds are most often quoted as a percentage of:

  1. face value
  2. book value
  3. market value
  4. whatever value the broker says

Answer(s): A

Explanation:

face value. The price is 100.00 if the yield is the same as the coupon rate. A price of less than
100.00 means the yield is higher than the coupon rate. A price of more than 100.00 means the yield is lower than the coupon rate. The prices are a percentage of 100.00. However, treasury bonds and municipal bonds are not quoted in this way.



Which of the following is a right for shareholders of common stock?

  1. the right to have the stock price increase
  2. the right to vote about important matters of the company
  3. the right to dividends
  4. both B and C

Answer(s): B

Explanation:

the right to vote about important matters of the company. Shareholders have no expectation of stock price increase or dividends. They are entitled to receive dividends only if the board of directors declares them.



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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