SERIES-7 Practice Questions

$100 profit. The long position in the June call is a $200 profit ($1,200 - $1,000). The short position in

the March call is a $300 loss ($900 - $300). Combining the gain and loss results in a $100 loss.

securities backed by the general credit of the issuers but no specific collateral. And in the case of

some issuers, that may be fairly worthless.

by competitive biding. The quoted prices for treasury bonds-as with all negotiable securities-is

determined in the market by competitive biding.

special tax. The other categories are not revenue bonds. Special tax is the only type that fits the

general grouping.

$6.19. The fund has a redemption fee of 1%. This is about 6 cents based upon the bid price.

Subtracting that from the $6.25 bid results in $6.19.

the right to vote about important matters of the company. Shareholders have no expectation of stock

price increase or dividends. They are entitled to receive dividends only if the board of directors

declares them.

$600. The maximum profit is the difference between strike prices less the debit amount. The debit

amount is $4 ($7 - $3). The difference between strike prices is $10 ($60 - $50). Multiply the $6

difference by 100, which is the number of shares on one option.

premium. That’s the term for the option cost.

operation and maintenance fund. This receives the top priority followed by debt service,

maintenance reserves, and lastly renewal and replacement.

when interest rates fall. Homeowners are most likely to refinance when rates are lower than the

past.