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Free Series 7 practice

Free Series 7 practice questions, every answer explained.

Three real-difficulty samples below, written to the current FINRA outline. The full platform behind them is free with an account: 2,000 original Series 7 questions weighted to the real function split, full 125-question simulated exams on a 225-minute clock, flashcards, and diagnostics that show exactly what to fix. No card, no trial clock.

Question 1 · Options strategies

An investor buys 100 shares of XYZ at $58 and writes 1 XYZ 60 call at 3. What is the maximum gain?

  1. A$300
  2. B$500
  3. C$5,500
  4. DUnlimited
Show the answer and why every option is right or wrong

Answer: B

A. The $300 premium is only part of the gain. The investor also keeps the stock's appreciation from $58 up to the $60 strike, where it gets called away.

B. Correct. If the stock is called at $60, the investor makes $2 per share on the stock plus the $3 premium: $5 per share, $500 total. Covered-call maximum gain is (strike minus cost) plus the premium.

C. $5,500 is the maximum LOSS, not the gain: the stock falling from $58 to zero costs $5,800, cushioned by the $300 premium.

D. Writing the call caps the upside at the strike. Unlimited gain belongs to a plain long stock position with no call written against it.

Question 2 · Municipal securities

A customer in the 32% federal bracket is offered a 4.00% general obligation municipal bond. What is the tax-equivalent yield?

  1. A2.72%
  2. B4.32%
  3. C5.88%
  4. D12.50%
Show the answer and why every option is right or wrong

Answer: C

A. 2.72% is the formula run backwards: multiplying 4.00% by (1 minus 0.32) tells you what a TAXABLE 4% bond keeps after tax, not what the muni is worth.

B. 4.32% just adds the bracket to the coupon. The comparison needs division, not addition.

C. Correct. Tax-equivalent yield = municipal yield divided by (1 minus the tax bracket): 4.00% / 0.68 = 5.88%. A taxable bond must pay 5.88% to leave this customer the same after-tax income.

D. 12.50% divides by the bracket (0.32) instead of by (1 minus the bracket). The denominator is what the investor keeps, not what the IRS takes.

Question 3 · Margin accounts

A long margin account holds $16,000 of market value against a $13,000 debit balance. Under FINRA's 25% minimum maintenance requirement, what happens?

  1. ANothing, the account meets the minimum
  2. BA maintenance call for $1,000
  3. CA maintenance call for $4,000
  4. DA maintenance call for $5,000
Show the answer and why every option is right or wrong

Answer: B

A. Equity is $16,000 minus $13,000 = $3,000, which is 18.75% of market value. That is below the 25% minimum, so the account is in violation.

B. Correct. The minimum equity required is 25% of $16,000 = $4,000. The account holds $3,000, so the call is for the $1,000 difference.

C. $4,000 is the total equity the account must hold, not the amount of the call. The account already has $3,000 of it.

D. $5,000 would restore equity to Reg T's 50% initial requirement. Maintenance calls only bring the account back to the 25% minimum, not to initial.

The other 2,000 work exactly like this

Every question in the bank explains all four choices, feeds your concept-level diagnostics, and rolls up into full 125-question simulated exams weighted like the real Series 7, 91 of every 125 from Function 3. All of it is free with an account.

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