Comprehensive general securities representative knowledge for the FINRA Series 7 qualification examination, with a worked explanation on every practice question.
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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 with worked answersFrequently 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, with a worked explanation on every question.
- 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 against the blueprint. Timed mocks are free with an account.
- How does Examworthy help me prepare for Series-7?
- Every practice question carries a worked explanation and a per-distractor rationale, mapped to the official blueprint domains. You learn why each answer is right or wrong, not just the letter.
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- 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.
