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  1. Home
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  3. SERIES 7

FINRA SERIES 7 Exam (page: 6)
FINRA General Securities Representative ination (GS)
Updated on: 25-Dec-2025

Viewing Page 6 of 81
SERIES 7 PDF 400 Questions

Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40. What conversion ratio does Bubba determine?

  1. 40
  2. 30
  3. 25
  4. 15

Answer(s): C

Explanation:

25. The conversion ratio is how many shares of common stock Bubba obtains by converting. Divide the bond price - $1,000 for a single bond - by the $40 conversion price.



Bubba buys a bond issued at par with a 5% coupon that is convertible into common stock at $40. The bond increases in value by 20 points. What is the conversion parity of the stock?

  1. $25
  2. $40
  3. $48
  4. $50

Answer(s): C

Explanation:

$48. A 20-point increase results in a bond value of $1,200. Divide that by the conversion ratio of 25 shares to arrive at $48.



The most common type of bond issued by a well-established company is:

  1. a debenture
  2. a senior secured note
  3. a convertible
  4. an open-end mortgage

Answer(s): A

Explanation:

a debenture. Because of the company’s well-established financial condition, it issues a debenture that has no specific collateral and is only backed by the creditworthiness of the issuer.



A corporate bond is quoted as having a net change in value of plus one point. By how much did the bond price increase?

  1. $1,000
  2. $100
  3. $10
  4. $1

Answer(s): C

Explanation:

$10. A point is 1% and bonds are priced in $1,000 increments. Multiplying $1,000 by 1% equals $10.



A basis point is:

  1. 0.10%
  2. 0.01%
  3. 1.00%
  4. 0.001%

Answer(s): B

Explanation:

0.01%. A basis point is one-hundredth of a point. Since a point is 1%, a basis point is 0.01%. A bond price change of one basis point is ten cents ($1,000 x 0.01%).



Viewing Page 6 of 81



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