Comprehensive general securities representative knowledge for the FINRA Series 7 qualification examination, with every answer explained, right and wrong.
Free sample questions
No account needed. Every question explains why every answer is right or wrong, just like the full bank.
lock_openFree sampleProvides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Recordshard
How does a general obligation (GO) bond differ from a revenue bond in the source used to service the debt?
- AA GO bond is serviced from the taxing power and general credit of the issuing municipality, whereas a revenue bond is serviced only from the earnings of a specific project or facility.check_circle Correct
- BA GO bond is serviced from the earnings of a single toll facility, whereas a revenue bond is serviced from ad valorem property taxes levied by the issuer.
- CA GO bond is serviced by the federal government under a moral obligation pledge, whereas a revenue bond is serviced by the state legislature each year.
- DA GO bond and a revenue bond are both serviced from the same debt service reserve fund held by the trustee, differing only in maturity length.
Distinguish a GO bond, backed by taxing power, from a revenue bond, backed only by project earnings. The defining line between the two municipal structures is the pledged repayment source: a GO bond rests on the issuer's taxing power and general credit, so it typically needs voter approval, whereas a revenue bond is self-supporting and repaid only from the facility's revenues.
Why A is correct: Correct. A GO bond is backed by the issuer's full faith, credit, and taxing power, while a revenue bond depends solely on the net or gross revenues produced by the financed facility.
Why B is wrong: Tempting because it names real repayment sources, but it reverses them: facility earnings back revenue bonds and ad valorem taxes back GO bonds, so the pairing is exactly backwards.
Why C is wrong: Wrong because GO bonds carry no federal guarantee; a moral obligation pledge is a limited legislative undertaking on certain revenue issues, not the defining feature of a GO bond.
Why D is wrong: Wrong because the two are distinguished by their repayment source, not maturity; a shared reserve fund does not exist across the two structures and maturity is not the defining difference.
lock_openFree sampleOpens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectivesmedium
How does a joint account registered as joint tenants with right of survivorship (JTWROS) differ from one registered as tenants in common (TIC) when one of the two co-owners dies?
- AIn JTWROS the deceased owner's interest passes to their estate, while in TIC the interest passes automatically to the surviving owner.
- BIn both JTWROS and TIC the deceased owner's interest passes to the surviving owner, so the two registrations are functionally identical on death.
- CIn JTWROS the deceased owner's interest passes automatically to the surviving owner, while in TIC that interest passes to the deceased owner's estate.check_circle Correct
- DIn both JTWROS and TIC the deceased owner's interest passes into that owner's estate, so probate applies equally to each registration.
JTWROS passes a deceased co-owner's interest to the survivor by survivorship, whereas tenants in common passes it to the deceased's estate. The distinction turns on the right of survivorship: JTWROS vests the whole account in the survivor automatically, while a tenant in common holds a divisible fractional interest that is disposed of through the deceased owner's estate.
Why A is wrong: This reverses the two registrations; survivorship is the defining feature of JTWROS, not of tenants in common, so the descriptions are swapped.
Why B is wrong: It is tempting because both are joint registrations, but only JTWROS carries survivorship; treating them as identical ignores the estate transfer that defines TIC.
Why C is correct: Right of survivorship means the survivor takes the whole account by operation of law, whereas a tenant in common's fractional share flows into their estate for distribution under the will.
Why D is wrong: This correctly describes TIC but wrongly applies estate transfer to JTWROS, whose survivorship feature bypasses probate for the deceased's share.
lock_openFree sampleObtains and Verifies Customers' Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactionsmedium
A customer wants an order that will be triggered only if the stock rises through a price above where it currently trades. Relative to the current market, where must a buy stop order be placed, and what type of protection does it typically provide?
- ABelow the current market, used to protect a profit on an existing long position from further decline.
- BAbove the current market, used to limit a loss on an existing short position if the stock rises.check_circle Correct
- CBelow the current market, used to buy in at a lower price after the stock has fallen through the stop.
- DAbove the current market, used to guarantee a purchase price no higher than the stop once it is elected.
A buy stop is entered above the current market and is typically used to protect a short position or capture upside momentum. A stop order rests away from the market until the stock reaches its trigger. Buy stops are set above the market because they are elected by a rising price, most often to limit losses on a short sale, while the mechanics offer no execution price guarantee once triggered.
Why A is wrong: This describes a sell stop, not a buy stop. A sell stop sits below the market to protect a long position, so both the placement and the strategy are wrong for a buy order.
Why B is correct: A buy stop is placed above the current market and is elected when the stock trades at or through the stop price, commonly to cap losses on a short sale or to buy on upside momentum.
Why C is wrong: A resting order to buy below the market at a set price is a buy limit, not a buy stop. A buy stop is never placed below the market, so this confuses the two order types.
Why D is wrong: Placement above the market is right, but a plain buy stop guarantees no price. Once triggered it becomes a market order and can fill above the stop, so the price guarantee is false.
More free Series-7 practice questions, every answer explainedFrequently asked questions
- How many questions are on the Series-7 exam?
- The FINRA Series 7 (General Securities Representative) exam has 125 (130 administered) questions and runs for 225 minutes. The format is multiple choice, closed book.
- What score do I need to pass Series-7?
- The pass mark is 72%. Examworthy gives you a per-domain readiness score so you can see which domains are holding you back before you book.
- How much does the Series-7 exam cost?
- The exam costs 395 USD to sit. Practising on Examworthy is free to start, and every answer is explained, right and wrong.
- Is there a Series-7 practice exam?
- Yes. Examworthy's exam mode runs a timed Series-7 practice exam (mock) paced to match the real exam, scored per domain so you can see exactly where you stand. Timed mocks are free with an account.
- How does Examworthy help me prepare for Series-7?
- Every practice question explains why the right answer is right and why each wrong one is wrong, mapped to the official blueprint domains. You learn the reasoning, not just the letter.
- Is Examworthy affiliated with FINRA?
- No. Examworthy is not affiliated with or endorsed by FINRA. Our questions are original, blueprint-aligned practice material; we never reproduce live exam items.
Examworthy is not affiliated with or endorsed by FINRA. All questions are original, blueprint-aligned practice material. We never reproduce live exam items. Series-7 and related marks belong to their respective owners.
