Series 7 Suitability Questions/Finance Exam Tutor

200 Series 7 Suitability Questions

200 Questions with Answers and Very Detailed Explanations (41 pages of explanations covering lots of Suitability concepts) The explanations reflect some of the most important concepts from Series 7 Exam Tutor's materials that we use in tutoring sessions - Will be emailed via 2 PDF Files

Sample Series 7 Suitability Questions

These suitability questions are a sample of Series 7 Exam Tutor's complete file of suitability questions. At the moment, we have over 400 series 7 suitability or suitability related questions. Our goal is to have 500 suitability or suitability related questions. To learn or reinforce concepts, we use suitability questions during tutoring sessions.

Sample Suitability Question 1

A customer of yours is interested in an options strategy that has unlimited gains and limited losses. Which of the following would you recommend to her?
A) Long stock combined with long put
B) Short stock combined with long call
C) Long stock combined with short call
D) Short stock combined with short put

Sample Suitability Question 2

Your customer has heard that investment managers try to achieve alpha but he does not understand what this really means. You should tell him?
A) Alpha can be viewed as the excess return (or short fall) relative to a benchmark index
B)Alpha is the market’s return. All investment managers try to match this return
C) Alpha measures market risk
D) Alpha is only relevant to investing in stocks

Sample Suitability Question 3

Some mutual fund families offer various share classes such as A, B, C, D, Institutional and no-load. C- Shares would be LEAST appropriate for an investor with the following characteristic:
A) A short time horizon
B) A long time horizon
C) An intermediate time horizon
D) A small amount of money to invest

Sample Suitability Question 4

In order to make recommendations to clients, a registered representative is required to ask for various types of information regarding the customer’s investment profile. This information includes but is not limited to: time horizon, investment objectives, tax status, age, liquidity needs, risk tolerance, etc. If the client does not disclose ALL of the requested information, can the registered representative still make recommendations?
A) No
B) Yes
C) Yes but only if the registered representative believes he or she has enough information to make an appropriate investment recommendation.
D. No, providing a recommendation without having all suitability information would violate FINRA’s suitability rules.

Sample Suitability Question 5

Your 62 year old customer has contributed $150,000 to a non qualified variable annuity. Today, the account is valued at $250,000. During the accumulation period, the customer decides to withdraw $25,000 to buy a car. Your customer asks you about how the withdrawal will be taxed. What should you tell the customer?

A) LIFO
B) Any method that is fair
C) Contributions first and then earnings
D) FIFO

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