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Official Practice ProblemFINRA Series 7 Blueprint: Function 3
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Question #s7-prep3-s7-q-265Function 3Fundamental

Common Stock

What is the effect of a forward stock split on an investor's holdings?

Correct Choice: B

In a forward stock split, the number of shares increases and the price per share decreases proportionally. For example, in a 2-for-1 split, an investor with 100 shares at $50 would have 200 shares at $25. The total value

Complete Analysis & Legal Rationale

In a forward stock split, the number of shares increases and the price per share decreases proportionally. For example, in a 2-for-1 split, an investor with 100 shares at $50 would have 200 shares at $25. The total value and proportionate ownership remain the same.

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 concept in the explanation.

Choice BCorrect
None

Matches the verified teaching point in the explanation.

Choice CIncorrect
Concept Trap

Does not match the governing concept in the explanation.

Choice DIncorrect
Concept Trap

Does not match the governing concept in the explanation.

Authorities & References:

Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.

🏛️

Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #s7-prep3-s7-q-265 (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 pending rule-specific upgrade. Verify against current FINRA materials.

Read FINRA Official Rule

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