Free SERIES 7 Exam Braindumps (page: 35)

Page 34 of 101

The term “secondary market” refers to:

  1. trading in issues of low quality
  2. trading in outstanding issues
  3. issues that banks are not permitted to underwrite
  4. private placements

Answer(s): B

Explanation:

trading in outstanding issues. Secondary market transactions involve trading in securities after the original issue is made. When an issuer offers new securities to the public it is a “primary offering”.



An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?

  1. a hot issue
  2. a mutual fund
  3. a private placement
  4. an exempt security

Answer(s): C

Explanation:

a private placement. Normally, private placements are conducted with an investment letter.



In the distribution of a new issue underwriters or selling group member are prohibited from:

  1. selling to the public at the so-called public offering price
  2. selling to another broker or dealer who needs to fill an accommodation order
  3. withholding blocks of a new issue in the member’s account
  4. all of the above

Answer(s): C

Explanation:

withholding blocks of a new issue in the member’s account. Underwriters and selling group members are prohibited from keeping blocks of a new issue for their own accounts.



The general purpose of the Securities Act of 1933 is to:

  1. regulate the activities of investment advisers
  2. regulate the sale of securities on national exchanges
  3. provide for disclosure of information about new securities offerings
  4. provide for disclosure of the financial condition of underwriters

Answer(s): C

Explanation:

provide for disclosure of information about new securities offerings. The 1933 act is primarily concerned with registration and disclosures relating to new securities.






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