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

When a stock trades ex-rights, buyers no longer receive the subscription rights associated with the shares.

Question 2

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

Accepted Answer

A standard trading unit of 100 shares

Answer

A round lot is the standard trading unit of 100 shares; trades in fewer shares are called odd lots.

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 poison pill is a shareholder rights plan that allows existing shareholders to buy more shares at a discount, diluting the hostile acquirer's ownership.

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

FINRA defines a pattern day trader as someone who executes four or more day trades within five business days in a margin account.

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 ask (or offer) price is the lowest price a seller is willing to accept for a security.

Series 7 – General Securities Representative Exam Practice Test

Series 7 – General Securities Representative Exam Practice Test

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