Series 7 practice questions and answers 2026. Tap an option to test yourself — you'll see the correct answer and a plain-English explanation for every question. Free, no login.
Q11An individual liquidated 300 shares of Ford common at $10 in which he had a cost basis of $20 with no additional gains or losses for the year on December 30th. He bought 300 shares of Ford at $11 on January 10th because of his long-term bullish belief in Ford. What is his year-end loss of $3,000?
✓ Correct answer: C. not deductible in the year of sale
According to the 30-day wash sale rule, a sale at a loss, though typically allowed to be included on a taxpayer's year-end computation of net gains or losses for that year, will be disallowed from current deductibility if the investor buys the same security or one substantially identical to it within 30 days after, or 30 days before the date of the sale that generated the loss. Within 30 days of the sale at a loss on December 30th, 300 shares of Ford were purchased on January 10th. The December 30th loss cannot be deducted in the year of sale due to the fact that the Ford stock was bought in the first few days of January.
Q12What percentage of its income is a REIT required to distribute to its equity investors?
✓ Correct answer: A. 90%
To qualify as a ‘Regulated Investment Company’ and get the special flow-through tax treatment under the Internal Revenue Code, 90% flow through is a requirement. IF the REIT doesn’t distribute enough income, it will pay taxes on 100% of its net investment income.
Q13Capitalization refers to a company’s equity plus its long-term debt. Which of the following ratios are used to calculate capitalization:
✓ Correct answer: C. All of the above
Capitalization refers to a company’s equity plus its long-term debt. There are several ratios used to calculate this from various perspectives.<br/><br/>debt-to-equity ratio, Bond ratio, Common-stock and preferred-stock ratio.<br/><br/>Capitalization refers to a company’s equity plus its long-term debt. There are several ratios used to calculate this from various perspectives.<br/><br/>debt-to-equity ratio, Bond ratio, Common-stock and preferred-stock ratio.
Q14A company issues one million shares of common stock in a rights offering to raise $10 million of new capital. How many rights will the company distribute to its shareholders if at the time of the offering, there are already six million shares in outstanding?
✓ Correct answer: D. six million
Each outstanding share is given one right.
Q15A member may not publish a research report regarding a subject company for which the member acted as manager or co-manager of a secondary offering for <code>________</code> days following the date of the offering.
✓ Correct answer: C. 10 calendar days
A member may not publish a research report regarding a subject company for which the member acted as manager or co-manager of a secondary offering for 10 calendar days following the date of the offering.
Q16SEC Rule 10b-18 provides an opportunity for publicly traded issuers to reacquire their shares in the secondary market. To comply with this regulation:
✓ Correct answer: C. the issue must limit its purchases of shares on any given trading day to maximums set in the regulation.
There are volume reacquisition limits set forth in 10b-18 as well as time-of-day and bid price restrictions.
Q17All of the following are regulated by the Securities Act of 1933 EXCEPT:
✓ Correct answer: C. Blue Sky laws
Since the Securities Act of 1933 is a Federal law, the Act of 1933 does not include Blue Sky (state) laws.
Q18Big House Brokerage bought 1000 bonds of XYZ Ltd for $1000 per bond. Over the course of the day Big House sold various smaller quantities of these bonds to their own customers for $1010 per bond each. This difference in price between what Big House bought the bonds for and sold them to their clients for is known as what?
✓ Correct answer: C. Markup
Markup is when a brokerage sells bonds directly to a customer in a principal trade at a higher price than it paid to buy the bonds.
Q19Which of the following are advantages of a transfer on death (TOD) account?
✓ Correct answer: D. All of the above
Avoiding probate, assets passing directly to the beneficiaries, and being allowed to name beneficiaries on a taxable account are all advantages of a transfer on death (TOD) account.
Q20Five years after purchasing a ten-year municipal at 102, an individual sells it at 101. What is tax treatment?
✓ Correct answer: B. no capital loss or income deduction is realized
The $20 premium is amortized over the bond's ten-year life. Half of the premium has been written down after five years. The remaining premium is the same as the premium that was paid when the bond was sold. There is no gain or loss from the sale at 101.
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