Equity Securities & Stock Markets Flashcards
6 cards from real Series 7 – General Securities Representative Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Equity Securities & Stock Markets flashcards as text
A company's earnings per share (EPS) is $4 and the stock trades at $60. What is the price-to-earnings (P/E) ratio?
Answer: 15
P/E ratio = Price ÷ EPS = $60 ÷ $4 = 15.
Which of the following best describes a rights offering?
Answer: An option to buy stock at a discount given to existing shareholders before a new public offering
A rights offering allows existing shareholders to purchase new shares at a discounted price before they are offered to the public.
What is a tender offer in the context of equity securities?
Answer: A public offer to purchase shareholders' shares at a specified price, usually to acquire control
A tender offer is a public bid to buy a significant portion or all of a company's shares at a premium to gain controlling interest.
Which SEC rule governs the resale of restricted and control securities?
Answer: Rule 144
SEC Rule 144 establishes the conditions under which restricted and control securities may be sold to the public.
A 'blue chip' stock is best described as:
Answer: A stock of a well-established, financially stable, large-cap company
Blue chip stocks are shares of large, reputable, and financially sound companies with a long history of stable earnings.
What is the primary function of a market maker in equity markets?
Answer: To provide liquidity by continuously quoting bid and ask prices
Market makers provide liquidity by standing ready to buy and sell securities at publicly quoted bid and ask prices.
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Sources & references
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- finra.org — Eligibility, fees, passing score, score validity, test dates, retake policy, score release, exam format, exam information · verified Oct 2026
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