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Finra Exam Series-7 Topic 4 Question 109 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 109
Topic #: 4
[All Series-7 Questions]

An excerpt from a recent tombstone ad reveals bonds offered publicly at 101.

Why were they priced at a premium?

Show Suggested Answer Hide Answer
Suggested Answer: C

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


by Deonna at Mar 22, 2025, 03:18 AM

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Glendora
3 months ago
Haha, I bet the tombstone ad writer was just trying to sound fancy. 'Bonds offered publicly at 101' - they're really not fooling anyone!
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Izetta
1 months ago
D) to comply with SEC rules mandating such pricing for debt issues maturing in the year 2000 and thereafter
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Latonia
1 months ago
C) to provide the issuer with a larger deduction from pre-tax earnings for higher than usual interest payments
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Tequila
2 months ago
C) to provide the issuer with a larger deduction from pre-tax earnings for higher than usual interest payments
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Verlene
2 months ago
B) to reflect prevailing credit ratings and market conditions for the issuer
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Devora
2 months ago
B) to reflect prevailing credit ratings and market conditions for the issuer
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Gladys
2 months ago
A) to enable investors to establish a tax loss when the bonds are redeemed at maturity
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Laticia
2 months ago
A) to enable investors to establish a tax loss when the bonds are redeemed at maturity
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Rosendo
3 months ago
D seems like a stretch. I doubt the SEC has a rule specifically about pricing bonds maturing in 2000 and beyond. B is the most logical choice here.
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Karina
3 months ago
Interesting, I was thinking it might be C, but B makes more sense. The issuer probably wanted to offer a higher yield to attract investors.
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Gracia
2 months ago
Yeah, that makes sense. They likely priced the bonds at a premium to attract investors with a higher yield.
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Ty
3 months ago
I think B is the correct answer. The issuer probably wanted to reflect prevailing market conditions.
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Elizabeth
3 months ago
I believe the issuer priced the bonds at a premium to comply with SEC rules mandating such pricing for debt issues maturing in the year 2000 and thereafter.
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Alayna
3 months ago
Hmm, I think the answer is B. The bonds are priced at a premium to reflect the issuer's credit ratings and current market conditions.
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Alease
3 months ago
I agree with Shawnna. It makes sense that the premium pricing would be based on the issuer's creditworthiness and market conditions.
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Shawnna
4 months ago
I think the bonds were priced at a premium to reflect prevailing credit ratings and market conditions for the issuer.
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