Free SERIES 7 Exam Braindumps (page: 42)

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Which of the following holders of unregistered stock is precluded from selling shares under Rule 144?

  1. an institutional investor
  2. an officer of the issuing corporation
  3. a broker/dealer firm
  4. a holder of more than 10% of the outstanding stock

Answer(s): C

Explanation:

a broker/dealer firm. A broker/dealer cannot use Rule 144 when selling stock.



Bubba Corporation has a registered public offering of 750,000 shares at $40. An underwriter of 30,000 shares is advised by the manager that its retention will be 70%.
How many shares may the underwriter sell to its own customers?

  1. 30,000
  2. 21,000
  3. 9.000
  4. as many as it can up to a maximum of 51,000

Answer(s): B

Explanation:

21,000. The underwriter is permitted to retain 70% of the 30,000 shares. The remaining 9,000 shares are kept in the pot by the manager.



In a competitive bidding for mortgage bonds of a large public utility the winning underwriter is determined by:

  1. the highest dollar amount paid to the issuer
  2. the lowest net interest cost to the issuer
  3. the shortest maturity date for the bonds
  4. the refunding and sinking fund terms in the indenture

Answer(s): B

Explanation:

the lowest net interest cost to the issuer. All competitive bids are based upon the lowest interest cost.



Who is responsible for verifying that limited partners meet net worth and income requirements?

  1. the limited partners
  2. the general partner
  3. the sponsor
  4. the registered representative

Answer(s): D

Explanation:

the registered representative. Assuring that limited partners meet net wroth and income requirements is the responsibility of the registered representative.






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