A bank of 207 exam style questions for Series 7 exam candidates. Every answer comes with a four part rationale: why the correct answer is right, why the others are wrong, the principle behind it, and the takeaway to remember.
Sample question 1. OPTIONS: The buyer of a call option has the right to ___ the underlying at the strike price.
A. Lend
B. Buy
C. Borrow
D. Sell
Answer: B. Correct: A call buyer has the right to buy the underlying at the strike price. Why the other choices are wrong: the right to sell belongs to a put buyer, and borrowing or lending are not what an option grants. Principle: a call is the right to buy. Takeaway: call up to buy, put down to sell.
Sample question 2. OPTIONS: The buyer of a put option has the right to ___ the underlying at the strike price.
A. Sell
B. Lend
C. Borrow
D. Buy
Answer: A. Correct: A put buyer has the right to sell the underlying at the strike price. Why the other choices are wrong: the right to buy belongs to a call buyer, and borrowing or lending are not what an option grants. Principle: a put is the right to sell. Takeaway: put it back to the seller, call it away as a buyer.
Sample question 3. OPTIONS: The fixed price at which an option can be exercised is the ___ price.
A. Strike
B. Par
C. Market
D. Spot
Answer: A. Correct: strike price, the fixed price written into the contract at which the holder may buy or sell the underlying. It never moves during the life of the option. Why the others are wrong: market and spot prices are the constantly changing price of the underlying, not the contract price; par is a bond face value term, unrelated to options. Principle: an option locks in one price, the strike, so the whole trade is a bet on where the market price sits relative to that fixed strike. Takeaway: strike is the agreed exercise price, market is where the stock actually trades.
What you get on iKuiz
207 questions for this exam, in Live Test, Study Mode, Flashcards, and MyTutor, a personal AI style tutor that teaches one concept at a time.
A readiness score that tells you honestly whether you are prepared, plus your weak areas by topic.
Every question read aloud if you want it, and a new free Question of the Day every day.
One membership covers all 200+ exams on the platform, from nursing to trades to test prep.