General Securities Representative Qualification Examination (GS)

Question 1

Who owns a corporation?

A. the holders of common stock and the holders of preferred stock

B. the owners of debentures

C. the holders of common stock

D. the government

Correct Answer: A

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Question 2

Bubba and his wife, Bubbette, maintain a joint account with a brokerage firm as "joint tenants in common". Bubbette calls a registered representative at the brokerage and places an order to sell 100 shares of XYZ, which is long in the account.
Which of the following statements is correct about this order?

A. the order may not be accepted

B. it may be entered only after confirming with Bubba

C. it may be entered

D. it must be approved by an officer of the brokerage prior to entry

Correct Answer: C

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Question 3

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

A. the sponsor

B. the general partner

C. the registered representative

D. the limited partners

Correct Answer: C

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Question 4

Bubba sells short 100 XYZ at $60 and makes the required Regulation T deposit of 50%. XYZ then rises I price to $65.
At this point what is the credit balance?

A. $3,500

B. $9,000

C. $6,000

D. $2,500

Correct Answer: B

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Question 5

Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm's research report on that stock?

A. if it is accompanied by a red herring

B. if his firm is not the managing underwriter

C. if he has permission of his employer

D. under no circumstances

Correct Answer: D

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Question 6

The return by the receiving party of securities previously accepted for delivery or a demand by the delivering party for return of securities that have been delivered is called:

A. close-out

B. reclamation

C. re-delivery

D. rejection

Correct Answer: B

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Question 7

Which of the following does not decrease basis?

A. cash or property paid out

B. losses

C. income from extraordinary sources

D. depletion of real property

Correct Answer: C

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Question 8

Which of the following has the least active secondary market?

A. treasury bills

B. banker's acceptances

C. commercial paper

D. certificates of deposit

Correct Answer: C

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Question 9

Prospective bidders for a municipal bond being issued should consult what document for relevant procedures?

A. the offering circular

B. the SEC Registration Statement

C. the Eastern account agreement

D. the official notice of sale

Correct Answer: D

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Question 10

Which of the following stock exchanges is not registered with the SEC?

A. Chicago Stock Exchange

B. Boston Stock Exchange

C. all are registered

D. Pacific Stock Exchange

Correct Answer: C

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Question 11

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?

A. 30,000

B. 21,000

C. 9.000

D. as many as it can up to a maximum of 51,000

Correct Answer: B

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Question 12

Under a leaseback arrangement used to finance construction of local schools, who is the issuer of the municipal bonds?

A. the local school district

B. a legal authority created for this purpose

C. the state in which the schools are located

D. a public housing authority commissioned by the federal government

Correct Answer: B

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Question 13

All sales literature and advertising relating to investment company shares prepared by members of FINRA must be filed for review with which of the following?

A. SEC

B. Anti-Trust Division of the Justice Department

C. FINRA

D. Federal Reserve Board

Correct Answer: C

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Question 14

Which of the following is an acceptable deposit to answer an NYSE maintenance call?

A. US savings bond

B. US treasury notes

C. SMA

D. all of the above

Correct Answer: B

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FINRA General Securities Representative Qualification Examination (GS) - Series-7 Exam Practice Test

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