Free Practice Questions for FINRA Series-7 Exam

$8.50. Subtract the preferred dividend of $800,000 (100,000 x 8% x 100) from the net income. Divide the result of $3,400,000 ($4,200,000 - $800,000) by the 400,000 common shares to obtain $8.50.

FINRA. Sales literature regarding investment company shares must be filed with FINRA within three days after the first use.

cannot be determined. Since Bubba has not yet sold the stock, a profit cannot be determined on the stock. He has a $400 profit on the option.

8%. The sales charge in this case is $1.44. Dividing that into the offering price of $18.04 results in 8%.

under no circumstances. The representative may send the red herring but not a research report of his firm.

purchase the preferred stock and sell an appropriate amount of the common stock “short exempt”. Arbitrage is the nearly simultaneous purchase and sale of equal securities in different markets for a profit. Selling four shares of common stock for every one share of preferred stock purchased provides a profit. The transactions involve the same number of common shares because the preferred is convertible to common at a four to one ratio.

if it does not exceed $1,000. If the net amount due is less than $1,000 no action is required under Reg T.

Regulation T. Because this regulates brokers extending credit to customers, it is important to the securities industry but does not have an extensive effect on the general economy.

the issuing municipality. The issuer pays for the attorney.

transfer of ownership of a limited partnership interest. Transfer of ownership does “not” result in automatic termination.