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Free SERIES 7 Exam Braindumps (page: 20)

Page 19 of 101
PDF with 400 Questions

Which of the following are direct obligations of the US government?

  1. Import-Export bank bonds
  2. Series EE bonds
  3. Farm Credit System bonds
  4. both B and C

Answer(s): B

Explanation:

Series EE bonds. Import-Export bank bonds and Farm Credit System bonds are not direct obligations of the United States.



A financial institution requesting a quote on a block of 100 bonds from a dealer in government securities receives a quote of 98.02 bid, 98.06 asked.
What is the dollar amount the institution will receive if the financial institution sells these bonds to the dealer?’’

  1. $98,062.50
  2. $98,187.50
  3. $98,250.00
  4. $98,750.00

Answer(s): A

Explanation:

$98,062.50. The financial institution receives the bid price, which is 98 and 2 / 32. Two thirty- seconds is $0.625. The 98 is the percentage of a $1,000 bond. Multiplying 98% by $1,000 results in $980. Add $0.625 to $980 to arrive at $980.625 per bond. But …there are 100 bonds. So, multiplying $980.625 by 100 equals $98,062.50.



Bubba plans to borrow some money and pledge securities as collateral. Which of the following can he not use as collateral?

  1. Series EE bonds
  2. US treasury bills
  3. US treasury notes
  4. US treasury bonds

Answer(s): A

Explanation:

Series EE bonds. Because Series EE bonds are not negotiable, they have no collateral value. They cannot be sold back to the US government.



Big Easy Investment Banking, Inc., is participating in an Eastern account underwriting of $10 million of municipal bonds by agreeing to underwrite 10% of the issue. One week later, $4 million remains unsold but Big Easy has distributed $1.5 million of bonds.
What is the liability of Big Easy remaining in the account?

  1. $0
  2. $400,000
  3. $600,000
  4. $1,000,000

Answer(s): B

Explanation:

$400,000. In an Eastern account, liability remains open until the entire syndication is closed. Therefore, Big Easy has a liability for 10% of the unsold portion. Since the unsold portion is $6 million, the liability for Big Easy is 10% of that amount, which is $400,000.






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