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Series 7 Assessment

Know More Than You Think?

Challenge yourself with 10 questions that feel just like the exam. Discover how close you really are. 

Think you're ready? Let’s find out.

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Question 1 of 10

Rocky purchases an original issued discount municipal bond with a $10,000 par value maturing in 15 years. For each year that Rocky holds this bond, which of the following is true?

A

The interest income he receives will be taxable at the federal level, but tax-free at the state level.

B

His cost basis will be adjusted annually towards par.

C

He will be required to pay tax on the annual accretion.

D

The interest income he receives will be tax-free at the federal level, but taxable at the state level.

Question 2 of 10

An investor purchases 10 May $60 calls for a premium of $0.50 and sells 10  May $55 calls for a premium of $1.50. Which of the following final trading prices would generate a profit?

A

$55.75

B

$56.25

C

$58.50

D

$61

Question 3 of 10

A client who owns a 529 plan plans on taking a distribution in 2026. Which of the following would be considered a qualified educational distribution?

A

Using $25,000 to buy a car so the student can commute to college from home

B

Paying $12,000 in tuition for a private high school

C

Withdrawing $50,000 on January 1, 2026, to cover fall 2025 and spring 2026 tuition (same academic year)

D

Withdrawing $75,000 on January 1, 2026, to cover spring 2026 and fall 2026 tuition (same calendar year)

Question 4 of 10

Isla, new to trading, opens a margin account and asks her broker for a quote on Exxon Mobil Corporation (XOM) at 12.12 by 12.14. She decides to short 100 shares. What will her credit balance be after depositing the required cash?

A

$1,826

B

$2,000

C

$3,212

D

$3,214

Question 5 of 10

An investor has been subject to the Alternative Minimum Tax (AMT) in prior years. Which of the following would be a concern when evaluating the investor’s current portfolio?

A

The investor has been subject to AMT in previous years, so their income will be subject to AMT in subsequent years as well

B

The investor has a large portfolio consisting of municipal bonds from their state of residence, primarily special assessment bonds and double-barreled bonds

C

The investor receives a large amount of pass-through income through ownership of unlisted REITs

D

The investor’s portfolio consists of multiple tax-free industrial development municipal bonds

Question 6 of 10

An investor holds a convertible preferred stock issued by ADR Industries with a conversion price of $20. The preferred stock is currently trading at $95. If the underlying common stock is trading at $19, what should the investor do?

A

Do nothing, as the convertible preferred is trading at parity

B

The preferred stock will likely be called by the issuer

C

Conversion would result in a loss to the investor

D

It would be appropriate to convert into the underlying common stock

Question 7 of 10

A customer wishes to sell 100 shares of their Meta stock (META) that are now trading at $660 per share. Which of the following instructions is valid for a sell stop order?

A

Sell 100 shares at $660 stop limit

B

Sell 100 shares at $680 stop

C

Sell 100 shares at the market

D

Sell 100 shares at $640 stop

Question 8 of 10

An investor buys a bond with a 4.5% coupon rate to yield 3.5%.  Based on this information, what would you expect the bond’s yield to maturity (YTM) to be?

A

4.5%

B

Less than 3.5%

C

More than 4.5%

D

Between 4.5% and 3.5%

Question 9 of 10

ABC Corporation has consistently paid a $1.00 annual dividend to common shareholders for the past five years. During that time, the stock market price has gradually increased. Based on this trend, what has likely happened to the stock’s current yield?

A

Increased

B

Decreased

C

Remained at 5%

D

Cannot be determined

Question 10 of 10

A customer buys 1 ABC Jan 124 put for a premium of $4.50 and simultaneously buys 100 shares of ABC stock for $128 per share. If the stock price drops to $119.75 by option expiration, how much of a loss will be realized by the investor?

A

$375

B

$825

C

$850

D

$1,275

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