Free SERIES 7 Exam Braindumps (page: 16)

Page 15 of 101

Which of the following is not an attribute of US treasury bills?

  1. an unusually high degree of liquidity
  2. always sells at a discount to face value
  3. is most often issued with three-month, six-month, and one-year maturities
  4. interest is exempt from federal income taxes

Answer(s): D

Explanation:

interest is exempt from federal income taxes. This is the choice that is “not” an attribute of treasuries. All of the other choices are attributes of US treasury bills, which are subject to federal income taxes.



Under which of the following conditions are homeowners most likely to refinance existing mortgages?

  1. when interest rates rise
  2. when interest rates fall
  3. when interest rates are stable
  4. when the yield curve is inverted

Answer(s): B

Explanation:

when interest rates fall. Homeowners are most likely to refinance when rates are lower than the past.



Which of the following is not true about US treasury bills?

  1. they are issued at a discount
  2. they are money market instruments
  3. they are issued in denominations of $1,000 to $1,000,000
  4. they are general obligations of the US government

Answer(s): C

Explanation:

they are issued in denominations of $1,000 to $1,000,000. Remember, the question asks what is “not” true. The smallest denomination for a US treasury bill is $10,000.



CMOs are sold and priced based upon which of the following:

  1. expected average life
  2. stated maturity
  3. current yield
  4. par value

Answer(s): A

Explanation:

expected average life. The average life of a CMO is the length of time that each dollar of invested principal is expected to remain outstanding. Pricing of CMOs is based upon this factor.






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

SERIES 7 Discussions & Posts