Finra
Series-7
Q1:
When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?
○
A
it increases○
B
if decreases○
C
if is unchanged○
D
none of the above
Finra
Series-7
Q2:
In mid-September, Bubba sells one XYZ February 50 call at $6. It subsequently expires without being exercised.
How is the premium taxed?
○
A
Bubba's cost of the underlying stock is reduced○
B
the $600 premium is a capital gain○
C
the $600 premium constitutes ordinary income○
D
the $600 premium is rolled over into another XYZ call with the next longest expiration date
Finra
Series-7
Q3:
Which of the following is true about option prices?
○
A
premiums on options for listed stocks are usually greater than on unlisted stocks○
B
premiums on options of higher-priced stocks are usually greater than on lower-priced stocks○
C
premiums on options of well-known companies are usually larger than on lesser-known companies○
D
premiums on options of volatile stocks are usually larger than on less volatile stocks
Finra
Series-7
Q4:
When an index option is exercised, settlement is made by:
○
A
delivery of the underlying securities○
B
delivery of a futures contract○
C
cash○
D
any of the above
Finra
Series-7
Q5:
When does a call option provide the most value to its holder?
○
A
when the underlying stock is extremely volatile○
B
in the month prior to its expiration○
C
when there is a large open interest in that class of option○
D
when the underlying stock price is rising