Which document is the primary disclosure document for a new municipal bond offering?

The registration statement filed with the SEC

The trust indenture qualified under the Trust Indenture Act

The underwriter's syndicate letter

Which money market instrument is an unsecured promissory note issued by a corporation, generally with a maximum maturity of 270 days?

Negotiable certificate of deposit

Which statement about the Trust Indenture Act of 1939 is TRUE?

It requires publicly offered corporate bonds (subject to exemptions) to be issued under an indenture with an independent trustee

It applies to U.S. Treasury and municipal bonds

It requires every corporate or municipal bond to be rated by a credit rating agency before sale and to carry bond insurance from a qualified insurer

It guarantees payment of interest to bondholders

A 27-year-old customer is opening a Roth IRA. She has a 40-year horizon, stable income, an emergency fund in place, and high risk tolerance. Which investment is MOST suitable?

A diversified equity growth mutual fund

Under FINRA rules, a mutual fund may describe itself as no-load only if it has no front-end or deferred sales charge and its 12b-1 or service fees do not exceed:

0.25% of average net assets per year

1.00% of average net assets per year

8.5% of the public offering price

0.50% of average net assets per year

A variable annuity in the payout phase uses an AIR of 4%. This month the separate account's annualized return was 6%. Compared with last month, the annuitant's payment will:

Stop until the return falls to the AIR

Series 7: F3: Provides Investment Information, Makes Suitable Recommendations

Q: How much of the Series 7 is provides investment information, makes suitable recommendations?

Official outline section: F3: Provides Investment Information, Makes Suitable Recommendations, 73% of the Series 7 (91 of 125 scored questions), per FINRA - Series 7 Content Outline (2025).

Function 3 is 73% of the Series 7 (91 of 125 questions).

Updated 2026-09-23 · 2 sources · By the SeriesPrepKit team

Exam weight

73%

Scored questions

Exam

Series 7

Outline

FINRA 2025

Where it sits in the outline

Official outline section: F3: Provides Investment Information, Makes Suitable Recommendations, 73% of the Series 7 (91 of 125 scored questions), per FINRA - Series 7 Content Outline (2025).

Function 3 is 73% of the Series 7 (91 of 125 questions). This is the exam: equities, debt, municipals, options, packaged products, alternatives, tax treatment and suitability.

Key concepts

Equities and tax. Rights of common and preferred holders, rights and warrants, ADRs, penny stocks; cost basis, holding periods, qualified vs. non-qualified dividends and wash sales (30 days before or after a loss sale).

Debt. Yields in order for a discount bond: coupon < current yield < YTM < YTC (reversed for a premium bond). Ratings, OID accretion, convertibles and conversion parity, CMOs and agency pass-throughs.

Municipals. GO vs. revenue analysis, call and refunding features, taxable-equivalent yield, and the tax treatment of discount and premium munis.

Options and packaged products. Payoff math for single options and strategies; mutual fund pricing and breakpoints; variable annuity accumulation units and AIR.

Worked example

Taxable-equivalent yield

A client in the 35% federal bracket compares a 3.25% municipal bond with a 4.75% corporate. Taxable-equivalent yield = 3.25 / (1 - 0.35) = 5.00%. The muni pays more after tax, provided the client actually uses that bracket; for a retirement account the comparison is irrelevant because the account is already tax-deferred.

Common traps

Recommending munis inside an IRA: the tax exemption is wasted.
Reading a strategy as bullish or bearish backwards; many questions are really asking for the market outlook.

Practice questions on this topic

Series 7 practice questions: Provides Investment Information, Makes Suitable Recommendations

A customer buys 1 NOP 25 call at 3 and sells 1 NOP 30 call at 1, same expiration. What is the maximum potential gain?

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Frequently asked questions

How much of the Series 7 is provides investment information, makes suitable recommendations?