General Securities Representative Qualification Examination (GS) v7.0 (Series-7)

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Total 404 questions

Which of the following is not found in the final prospectus?

  • A. a statement as to possible stabilization by the manager
  • B. the public offering price
  • C. a copy of the underwriting agreement
  • D. a statement that the SEC neither approves nor disapproves of the issue

Answer : C

a copy of the underwriting agreement. The underwriting agreement is not in the final prospectus. This is a contract between the issuer and the underwriting syndicate.

Bubba has a short margin account with a short market value of $22,000, a credit balance of
$42,000, and SMA of $500.
What is the NYSE minimum equity maintenance for this account?

  • A. $5,500
  • B. $6,000
  • C. $6,600
  • D. $12,600

Answer : C

$6,600. The NYSE maintenance requirement on short margin accounts is 30%. Multiplying the short market value of $22,000 by 30% equals $6,600.

How many days after the settlement date must a broker/dealer buy in a customer who has failed to deliver securities?

  • A. 10 days
  • B. 15 days
  • C. 30 days
  • D. 45 days

Answer : A

10 days. The customer has 10 days to deliver before the broker will buy in the account.

Provisions of SEC Rule 145 normally apply to an exchange of one security for another as a result of:

  • A. a stock split
  • B. a change in par value
  • C. a merger
  • D. a “no-sale” ruling issued by the SEC

Answer : C

a merger. Rule 145 basically applies to mergers, consolidations, and acquisitions.

A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so.
What type of bond is this?

  • A. limited tax
  • B. double-barreled
  • C. Series 8
  • D. moral obligation

Answer : D

moral obligation. The lack of a legally binding obligation removes the issue from the general obligation category. Although defaults are possible, it is usually held that no state legislature would allow a moral obligation issue to default.

A company may pay a declared dividend in which of the following ways:

  • A. with stock in a subsidiary company
  • B. with property
  • C. with cash
  • D. all of the above

Answer : D

all of the above. Dividends can be paid in all of these ways. They can also be paid with treasury stock or authorized but unissued stock.

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:

  • A. common stock
  • B. preferred stock
  • C. treasury bills
  • D. treasury bonds

Answer : C

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 option positions is indicative of the same class of option?

  • A. long one XYZ July 70 put and one XYZ July 70 call
  • B. long one XYZ October 20 call and one XYZ January 30 call
  • C. short one XYZ February 60 put and one ABC February 60 put
  • D. short one XYZ June 40 call and one ABC June 20 call

Answer : B

long one XYZ October 20 call and one XYZ January 30 call. Options in the same class are either both puts or both calls on the same security.

Approval for a registered investment company to change is investment objective from income to growth is required from which of the following?

  • A. the FINRA
  • B. the SEC
  • C. a majority of the shareholders
  • D. all of the above

Answer : C

a majority of the shareholders. Any factors that materially affect the interests of shareholders must be approved by a majority vote of the shareholders.

Which of the following is not an investment company within the terms of the Investment
Company Act of 1940?

  • A. a holding company dealing in mineral leaseholds
  • B. a face-amount certificate company
  • C. a unit investment trust company
  • D. a management company

Answer : A

a holding company dealing in mineral leaseholds. The other choices are the three classifications of investment companies under the 1940 act.

An ERISA benefits plan qualified under Section 401(a) of the Internal Revenue Code may:

  • A. purchase any IPO security provided the plan is not sponsored solely by a broker/dealer
  • B. apply for an exemption
  • C. only purchase securities rated “A” or better
  • D. purchase only securities issued by the state or federal government

Answer : A

purchase any IPO security provided the plan is not sponsored solely by a broker/dealer. An
ERISA plan that is qualified under Section 401(a) may purchase any IPO security provided that the plan sponsor is not a broker/dealer.

The expiration date of a listed option is:

  • A. the last day of the expiration month
  • B. the third Saturday of the expiration month
  • C. the Saturday following the third Friday of the expiration month
  • D. the third Friday of the expiration month

Answer : C

the Saturday following the third Friday of the expiration month. It is NOT the third Saturday.
The final day to trade options is the third Friday of the expiration month. The options expire the next da y.

Which of the following best describes phantom income?

  • A. income from deductions and tax credits
  • B. the non-taxable portion of a distribution
  • C. income received but not reported
  • D. income reported but not received

Answer : D

income reported but not received. Reportable income that is not distributable includes loan forgiveness.

The minimum denomination for a US treasury bond is:

  • A. $100
  • B. $1,000
  • C. $10,000
  • D. $100,000

Answer : B

$1,000. This is the minimum denomination. Normally, US treasury bonds are in much larger denominations.

The accounting statement that represents a companys financial position on a particular date is the:

  • A. income statement
  • B. balance sheet
  • C. Profit and Loss
  • D. cash flow statement

Answer : B

balance sheet. This report reflects the entire condition of the company by showing all assets, liabilities, and components of net worth.

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Total 404 questions