Series 7 Test Guide

By: Erin Hasinger, Tests.com

In order for an individual to become a representative of a broker-dealer for corporate securities and to register with the Financial Industry Regulatory Authority (FINRA), they must pass the Series 7 exam, also known as the Qualification Examination for General Securities Registered Representatives. Registration then qualifies one for purchase, sale and solicitation of securities products, such as municipal, corporate and municipal fund securities, options, investment company products, variable contracts, and direct participation programs.

The Series 7 exam is usually the first step for individuals who are interested in working as a registered representative for corporate securities, as it is a prerequisite for other securities exams, such as the Series 63 and Series 66 exams.

The exam is administered by FINRA and was created to ensure that each individual who is working as a registered representative is able to complete the tasks required of the position.

The exam is made up of 260 multiple-choice questions, of which only 250 are scored. The remaining ten questions are used as pretest questions and may be included on future exams. Exam questions emphasize critical functions of the securities representative role; 123 questions, nearly half the exam, cover the information and recommendations that can be provided to customers and potential customers.

The exam is comprised of questions that cover the following content areas:

     -   Seeks business for the broker-dealer through customers and potential customers

         (9 questions)

     -   Evaluates customers in terms of financial need, current holdings and available

          investment capital and helps them identify their investment objectives (4

          questions)

     -   Provides customers and prospective customers with information on investments

         and makes suitable recommendations (123 questions)

     -   Opens, transfers, and closes customer accounts and maintains appropriate account

          records (27 questions)

     -   Explains the organization, participants and functions of various securities markets

          and the principal factors that affect them (53 questions)

     -   Obtains and verifies the customer’s purchase and sale instructions, enters orders,

          and follows up on transaction completion (13 questions)

     -   Monitors the customer’s portfolio and makes recommendations consistent with 

          changes in economic and financial conditions as well as the customer’s needs and  

          objectives (21 questions)

Six hours are given to complete the exam. The test is given in two parts, each containing 125 questions. Test takers must score 70% to pass, and a score report is provided immediately following the completion of the exam.

If one fails the exam, it may be taken again after a 30-day waiting period.

A candidate can register by submitting a U10 form and the $265 registration fee to FINRA. Applications are available at www.finra.org. Once a test candidate has registered for the exam, they will be provided instructions for scheduling the exam. Exams are hosted at cities throughout the United States at Prometric and Pearson Test Centers. A complete list of exam locations can also be found at www.finra.org.

To find out more about the Series 7, or to find test preparation materials, visit the Series 7 Test Directory.