General Securities Representative Examination
The Series 7 exam qualifies candidates to sell a broad range of securities products, including stocks, bonds, options, municipal securities, mutual funds, variable annuities, and direct participation programs. It is the most widely held FINRA representative-level license and is required for full-service broker-dealer sales representatives. Candidates must pass the SIE exam and be sponsored by a FINRA member firm to sit for the Series 7.
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Practice Questions
Test your knowledge with these Series 7-style questions. Click an answer to check if you are correct.
1. An investor buys 1 XYZ Nov 60 call at $4. What is the breakeven point?
Correct: C. The breakeven for a long call is the strike price plus the premium paid. $60 strike + $4 premium = $64 breakeven. The stock must rise above $64 for the investor to profit at expiration.
2. Which type of municipal bond requires voter approval before issuance?
Correct: A. General obligation bonds are backed by the taxing power of the municipality and typically require voter approval (referendum) because they pledge taxpayer funds. Revenue bonds are backed by project revenue and do not require voter approval.
3. A customer invests $100,000 in Class A mutual fund shares with a 5% front-end load. How much is actually invested in fund shares?
Correct: B. With a 5% front-end load on a $100,000 investment, the sales charge is $5,000 ($100,000 x 5%). The remaining $95,000 is invested in fund shares. The sales charge reduces the amount of the initial investment that goes to work for the customer.
4. Under Regulation Best Interest (Reg BI), which of the following is NOT one of the four component obligations?
Correct: C. Reg BI has four component obligations: disclosure, care, conflict of interest, and compliance. Fiduciary obligation is not one of them -- Reg BI establishes a "best interest" standard for broker-dealers, which is distinct from the fiduciary duty applied to investment advisers under the Investment Advisers Act of 1940.
5. SIPC provides coverage up to what amount per customer for securities?
Correct: C. SIPC (Securities Investor Protection Corporation) protects customers up to $500,000 per customer, of which up to $250,000 may be in cash. SIPC covers customer assets in the event of a broker-dealer failure but does not protect against market losses or bad investment decisions.
Related Exams
These exams are commonly taken alongside or after the Series 7 to complete your registration requirements.
Securities Industry Essentials
The prerequisite corequisite exam. Must be passed before or in conjunction with the Series 7. Covers fundamental securities industry knowledge.
Uniform Combined State Law
Combines the Series 63 and Series 65 into one exam. Popular choice for Series 7 holders who also need to register as investment adviser representatives.
General Securities Principal
The next step for experienced Series 7 holders looking to move into management and supervisory roles at a broker-dealer.