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Official Practice ProblemFINRA Series 7 Blueprint: Function 3
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Question #s7-prep-series7-ch8-006Function 3Fundamental

Put Options

What is the breakeven point for an investor who buys 1 DEF 70 Put @ $5?

Correct Choice: C

Put breakeven = Strike Price - Premium. Breakeven = $70 - $5 = $65. The investor needs the stock to fall below $65 to profit.

Complete Analysis & Legal Rationale

Put breakeven = Strike Price - Premium. Breakeven = $70 - $5 = $65. The investor needs the stock to fall below $65 to profit.

Distractor Autopsy (Why Other Options Are Traps)

FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:

Choice AIncorrect
Concept Trap

Does not match the governing securities rule described in the explanation.

Choice BIncorrect
Concept Trap

Does not match the governing securities rule described in the explanation.

Choice CCorrect
None

Matches the verified teaching point in the explanation.

Choice DIncorrect
Concept Trap

Does not match the governing securities rule described in the explanation.

Authorities & References:

Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.

Official SourceFINRA FINRA Series 7 Content Outline — General Securities Representative Examination (Series 7) Content Outline
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Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #s7-prep-series7-ch8-006 (FINRA Series 7 Content Outline)

To pass the FINRA Series 7, candidates must understand not just the calculation formulas, but the exact federal securities acts, SRO rulebooks, and statutory frameworks that enforce them. Review the primary authority records below:

FINRAFINRA Series 7 Content Outline— General Securities Representative Examination (Series 7) Content Outline

Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.

Read FINRA Official Rule

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