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Official Practice ProblemFINRA Series 7 Blueprint: Function 3
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Question #s7-prep3-s7-q-373Function 3Fundamental

Bond Yields

For a bond trading at a premium, which of the following lists the yields from LOWEST to HIGHEST?

Correct Choice: B

Premium bond yields: YTC < YTM < CY < Coupon. Remember "lowest when you pay more."

Complete Analysis & Legal Rationale

For premium bonds, yields from lowest to highest are: YTC < YTM < Current Yield < Coupon Rate. The investor paid more than par, so all calculated yields are lower than the stated coupon rate.

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

This order is reversed - applies to discount bonds, not premium.

Choice BCorrect
None

Matches the verified teaching point in the explanation.

Choice CIncorrect
Concept Trap

This sequence is incorrect for premium bonds.

Choice DIncorrect
Concept Trap

YTC is the lowest yield for premium bonds, not YTM.

Authorities & References:

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

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-prep3-s7-q-373 (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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