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Series 7 — Practice Questions flashcards

6 of 60 questions free to study here · 17 topics · the whole deck is built into Willys

Multiple-choice practice questions, one best answer each, on options strategies and math, margin, suitability, municipal securities, taxes, retirement accounts, DPPs and fund sales charges.

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Practice deck · part of FINRA SIE and Series 7 · written against: FINRA content outlines; T+1 settlement (May 2024); SECURE 2.0 RMD ages. Updated 2026-10-10.

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  1. ABC trades at 63. An ABC 60 put is quoted at 1.50. How is that premium split between intrinsic value and time value?

    A) 3 intrinsic value and 1.50 time value
    B) 3 intrinsic value and no time value
    C) 1.50 intrinsic value and no time value
    D) 0 intrinsic value and 1.50 time value
    D) 0 intrinsic value and 1.50 time value

    A put is in the money only when the stock is below the strike, so a 60 put with the stock at 63 is out of the money and its whole premium is time value. The 3-point gap would be intrinsic value for a 60 call, not a put.
    Options Basics
  2. A customer owns 100 EFG bought at 62 and writes 1 EFG 65 call at 3. What are her maximum gain and breakeven?

    A) Maximum gain of 300 dollars and breakeven 59
    B) Maximum gain of 600 dollars and breakeven 59
    C) Unlimited maximum gain and breakeven 59
    D) Maximum gain of 600 dollars and breakeven 68
    B) Maximum gain of 600 dollars and breakeven 59

    If assigned she sells at 65, gaining 3 points on the stock plus 3 points of premium; her breakeven is the stock cost less the premium (62 − 3). Strike plus premium is the call buyer's breakeven, not the covered writer's.
    Covered and Hedged Positions
  3. A customer wrote 1 broad-based index 3,200 put. It is exercised when the index settles at 3,150. What must the customer do?

    A) Pay 50 dollars in cash
    B) Receive 5,000 dollars in cash
    C) Pay 5,000 dollars in cash
    D) Buy the index's component stocks at 3,200
    C) Pay 5,000 dollars in cash

    Index options settle in cash: the put is 50 points in the money and the 100 multiplier makes that 5,000 dollars, owed by the writer. No stocks change hands when an index option is exercised.
    Index Options
  4. A customer opens a new margin account and buys 1,500 dollars of stock. How much must she deposit?

    A) 1,500 dollars
    B) 750 dollars
    C) 2,000 dollars
    D) 1,125 dollars
    A) 1,500 dollars

    The FINRA minimum equity is 2,000 dollars, but a customer never has to deposit more than the cost of the purchase, so she pays the full 1,500. The 50% Reg T amount of 750 is below the minimum equity requirement.
    Margin
  5. A customer bought 200 shares at 30, sells them at 25 for a loss, and two weeks later buys 200 shares back at 26. What is her cost basis in the new shares?

    A) 30 per share
    B) 25 per share
    C) 31 per share
    D) 26 per share
    C) 31 per share

    Buying back within 30 days makes this a wash sale, so the 5-point disallowed loss is added to the 26 purchase price. Using the 26 purchase price alone ignores the disallowed loss.
    Cost Basis and Capital Gains
  6. A customer signs a letter of intent to invest 50,000 dollars in a fund's Class A shares but invests only 30,000 within the letter's period. What happens?

    A) The fund cancels her purchases and refunds her
    B) She keeps the reduced sales charge regardless
    C) She pays the 30,000-dollar rate, taken from escrowed shares
    D) She must invest the remaining 20,000 dollars
    C) She pays the 30,000-dollar rate, taken from escrowed shares

    A letter of intent is not binding, but if the customer falls short she pays the sales charge for the amount actually invested, collected from shares held in escrow. She cannot be forced to invest the rest.
    Mutual Fund Sales Charges

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More FINRA SIE and Series 7 decks

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About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

  • Checked against the FINRA Series 7 content outline (© 2025 FINRA; topic list only; no text copied).
  • Checked against the OCC's Characteristics and Risks of Standardized Options, FINRA Rules 2111, 2360 and 4210, Regulation T (12 CFR Part 220) and MSRB Rules G-11 and G-32 (reference only).
  • Checked against IRS Publications 550 and 590-A/590-B (U.S. government, public domain) for capital gains, wash sales, inherited basis, IRAs, rollovers and conversions.

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