Free SERIES 7 Exam Braindumps (page: 22)

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Municipal bond brokers generally conduct the following:

  1. trade for dealer banks
  2. trade for non-bank dealers
  3. trade for their own account
  4. both A and B

Answer(s): D

Explanation:

both A and B. Brokers generally operate as agents attempting to locate buyers or sellers for bond dealers. They do not trade for their own accounts or deal directly with individual investors.



Smart Guys Securities Corporation has given a workable bid to Better Guys Securities Corporation. If market conditions change, Smart Guys may:

  1. not change the bid
  2. not change the bid unless first notifying the other dealer
  3. change the bid only with prior approval of the other dealer
  4. change the bid

Answer(s): D

Explanation:

change the bid. A workable bid indicates a price level where a dealer is willing to negotiate business. It is not a firm bid and may be changed before becoming firm.



Municipalities are most likely to issue notes for which of the following purposes?

  1. short-term cash needs
  2. federal income tax payments
  3. repairs to infrastructure
  4. long-term financing

Answer(s): A

Explanation:

short-term cash needs. Notes are generally used for short-term needs.



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?

  1. limited tax
  2. double-barreled
  3. Series 8
  4. moral obligation

Answer(s): D

Explanation:

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.






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