Series 7 – General Securities Representative Exam Equity Securities & Stock Markets 3

Question 1

What does it mean when a stock is trading 'ex-rights'?

Accepted Answer

The stock is trading without the value of attached subscription rights

Answer

The stock's voting rights have been suspended

Answer

The stock has been delisted from the exchange

Answer

The stock's dividends have been suspended

Question 2

Which of the following describes a 'round lot' in equity trading?

Accepted Answer

A standard trading unit of 100 shares

Answer

Any trade of fewer than 100 shares

Answer

A block trade of 10,000 or more shares

Answer

A trade executed after market hours

Question 3

What is a 'poison pill' in corporate defense strategy?

Accepted Answer

A shareholder rights plan that dilutes the acquirer's stake if a hostile takeover is attempted

Answer

A strategy where a target company takes on excessive debt to deter an acquirer

Answer

A contractual clause requiring board approval for all stock sales

Answer

A rule requiring executive pay disclosure before any merger

Question 4

Under FINRA rules, a pattern day trader is defined as one who executes how many day trades within five business days?

Accepted Answer

Four or more

Answer

Two or more

Answer

Six or more

Answer

Ten or more

Question 5

What is the 'ask price' in a stock quote?

Accepted Answer

The price at which a dealer is willing to sell the security

Answer

The price the dealer is willing to pay to buy the security

Answer

The price at which the last transaction occurred

Answer

The average of the day's high and low prices

Question 6

Which type of stock order becomes a market order once a specific price level is reached?

Accepted Answer

Stop order

Answer

Limit order

Answer

Good-till-canceled order

Answer

Fill-or-kill order