About The Series 7 Exam

The Series 7 exam is a 250-question multiple-choice test divided into two 125-question segments. Three hours are given to complete each segment which most students find to be ample.

Each question on the exam has four choices: A,B,C or D. All questions are given equal weighting and every question should be answered. There is no penalty for a question answered incorrectly.

A score of 70% or better is passing. This means you must answer at least 175 questions correctly. It also means that you can miss any 75 questions and still pass the exam. For a sampling of some test questions, you can go to our Series 7 exam samples section.

Sample Question Formats

There are five basic multiple-choice formats found on the Series 7 examination.

1. The Incomplete Sentence Format: This type of format requires you to choose the best conclusion to complete the sentence.

Example:

The Federal Reserve Board (FRB) regulates:

a. Exchanges

b. Margin

c. Municipal securities industry

d. Futures market

(The correct answer is b.)

2. The Closed Stem Format In this format, you are asked a question and must select the best response.

Example:

General Obligation bonds are secured by which of the following?

a. User fees

b. Project revenue

c. Taxes

d. Moral obligations

(The correct answer is c.)

3. The EXCEPT Format: This format requires you to select the one incorrect response from among the choices presented.

Example:

All of the following are characteristics of Treasury notes EXCEPT:

a. They have a maximum maturity of ten years

b. They are sold at auctions

c. They are interest bearing securities

d. They are sold at discount

(The correct answer is d.)

4. Most / Least / Best Format: This type requires you to select an item that is either better or worse than the others.

Example:

Which of the following best describes T-bills?:

a. Long-term Treasury obligations

b. Short-term treasury obligations

c. Interest bearing securities

d. Non-marketable debt of the federal government

(The correct answer is b.)

5. Roman Numeral Format: This type requires determining the proper sequence or ranking of a set of items or when there is more than one correct response.

Example:

Place the following Moody ratings from highest to lowest:

I. Baa

II. B

III. A

IV. Aa

a.) II, I, III, IV

b.) I, II, IV, III

c.) III, II, IV, I

d.) IV, III, I, II

(The correct answer is d.)

Example 2 (Roman Numeral Format):

Which two of the following are on the down side of the market?:

I. Holder of a call

II. Writer of a call

III. Holder of a put

IV Writer of a put

a.) I & III

b.) I & IV

c.) II & III

d.) II & IV

(The correct answer is c.)

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Exam Breakdown

While your goal will be to learn as many concepts as possible, please remember that some areas should receive more emphasis than others since they represent a larger percentage of questions on the exam. An approximate number of questions in each topical area is found below. Please use this chart as a guideline only.

APPROXIMATE NUMBER OF QUESTIONS PER SUBJECT

MUNICIPAL SECURITIES (50)- Types of Municipal Securities, Primary and Secondary Market, MSRB Rules.

OPTIONS (50)- Strategies and Product Knowledge.

NEW YORK STOCK EXCHANGE (15)- Types of Orders, Floor Procedures, Tape Reading.

CUSTOMER ACCOUNTS (15)- Opening and Maintaining Customer Accounts.

REGULATIONS (15)- Securities Acts, NASD Rules.

DIRECT PARTICIPATION PROGRAMS (15)- Formation and Regulation, Types of Programs.

CORPORATE SECURITIES (15)- Common and Preferred Stock, Corporate Bonds.

PACKAGED SECURITIES (20)- Mutual Funds, Variable Annuities, REITs.

SECURITIES AND ECONOMIC ANALYSIS (15)- Technical and Fundamental Analysis, Economics.

U.S. GOVERNMENT SECURITIES (15)- Treasury and Agency Securities, CMOs.

MARGIN (10)- Regulations, Formulas and Computations.

TAXATION AND RETIREMENT PLANS (15)- Taxation of Securities, Qualified and Non-qualified Plans.

TOTAL QUESTIONS 250

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