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

Question 1

A company declares a 2-for-1 stock split. If a shareholder owns 100 shares at $80 each, what will they hold after the split?

Accepted Answer

200 shares at $40 each

Answer

50 shares at $160 each

Answer

100 shares at $40 each

Answer

200 shares at $80 each

Question 2

Which type of order instructs a broker to buy or sell a stock immediately at the best available current price?

Accepted Answer

Market order

Answer

Limit order

Answer

Stop order

Answer

Stop-limit order

Question 3

What is the primary difference between common stock and preferred stock?

Accepted Answer

Preferred stockholders have priority over dividends and assets in liquidation

Answer

Common stockholders have fixed dividends; preferred do not

Answer

Common stock cannot be traded on exchanges

Answer

Preferred stockholders always have voting rights

Question 4

An investor sells short 200 shares of XYZ at $50. If the price rises to $65, what is the investor's loss?

Accepted Answer

$3,000

Answer

$2,000

Answer

$13,000

Answer

$10,000

Question 5

Which market is known as the secondary market for over-the-counter (OTC) equity securities in the U.S.?

Accepted Answer

NASDAQ

Answer

NYSE

Answer

CBOE

Answer

CME

Question 6

What does the ex-dividend date determine?

Accepted Answer

The first day a buyer of shares will NOT receive the upcoming dividend

Answer

The date the dividend is paid to shareholders

Answer

The last day a shareholder can sell shares and still receive the dividend

Answer

The date the board declares the dividend