Free SERIES 7 Exam Braindumps (page: 15)

Page 14 of 101

Bubba Corporation owes income tax. Which of the following may be tendered at par value for payment of the tax?

  1. term bond
  2. tax anticipation bill
  3. special tax bond
  4. pre-issue bond

Answer(s): B

Explanation:

tax anticipation bill. These are specifically designated securities that may be used at face value for payment of corporate taxes.



An advertisement for a CMO security by a member of FINRA should disclose which of the following?

  1. the exact yield investor will earn
  2. the yield based upon the prevailing discount rate
  3. that the stated yield is an estimate that may vary passed upon prepayments and market factors
  4. that the yield may be greater than the stated percentage but never less

Answer(s): C

Explanation:

that the stated yield is an estimate that may vary passed upon prepayments and market factors. The only guarantee is that nothing is guaranteed, especially the yield.



Which of the following statements incorrectly describes US securities markets?

  1. a capital market comprised of long-term debt and equity issues
  2. a money market comprised of short-term debt and equity issues
  3. a municipal market comprised of tax-exempt issues of state and local governments
  4. a government and agency market comprised of both short-term and long-term debt issues

Answer(s): B

Explanation:

a money market comprised of short-term debt and equity issues. This is the statement that is “incorrect”. Equity issues are not traded in the money market, which consists only of high-quality short-term debt securities.



What rate of return takes into consideration appreciation or depreciation in market value relating to the par value of a debt security?

  1. current yield
  2. yield to maturity
  3. nominal yield
  4. basis yield

Answer(s): B

Explanation:

yield to maturity. The premium or discount in the security price relative to par value is considered when computing the yield to maturity.






Post your Comments and Discuss FINRA SERIES 7 exam with other Community members:

SERIES 7 Discussions & Posts