Series 7 Exam
The General Securities Representative Examination or Series 7 exam is mandatory for anyone who wants to sell any type of securities in the securities market.
Candidates who pass the Series 7 exam can go ahead and register to trade in all securities. They can be corporate securities, municipal fund securities, options, direct participation programs, investment company products, and variable contracts. The Series 7 exam is administered by FINRA or Financial Industry Regulatory Authority. This is one of the securities exams conducted by FINRA.
The Series 7 exam is also known as the General Securities Representatives Examination or simply as GS. The objective of the exam is to test the competence of entry-level representative of securities. A six-hour exam it is conducted in two sessions of three hours each of 130 questions each. It has 250 scored questions and 10 unidentified pre-test questions.
Series 7 Snapshot
|Format:||Multiple choice, Computer based exam|
|No. of Questions:||250|
|No. of test sessions:||3 each|
The exam tests the proficiency of the candidate in 5 key areas. These five areas represents the functions the candidate will undertake in her job.
- Area 1—Seeks business for the broker-dealer through customers and potential customers
- Area 2—Evaluates customers’ other security holdings, financial situation and needs, financial status, tax status, and investment objective
- Area 3—Opens accounts, transfers assets and maintains appropriate account records
- Area 4—Provides customers with information on investments and makes suitable recommendations
- Area 5—Obtains and verifies customers’ purchases and sales instructions, enters orders, and follows up
Registering for the Exam
To take the exam the candidate must be sponsored and associated by a FINRA member firm.The firm sponsoring the candidate must file a U4 or Uniform Application for Securities Industry Registration or transfer in the CRD (Central Registration Depository) and request for the Series 7 exam form on the U4.
Administration and Scoring
The six-hour exam is split into two sessions of three hours each. Each candidates questions are selected from a question bank, with no two candidates getting the same set. The exam has 250 questions and 10 unidentified pre-test questions strewn across the exam. There is no negative marking and students are encouraged to try all the questions worth 1 mark each. The test administrator will provide scratch paper and calculator for any workings. The calculator must be returned to the test administrator. Any other reference material is strictly forbidden.
Table of questions and number of questions
|Major Job Functions Number of Questions||Percentage of Test Questions||Number of Questions|
|Seeks Business for the Broker-Dealer through Customers and Potential Customers||27%||68|
|Evaluates Customers’ Other Security Holdings, Financial Situation and Needs, Financial Status, Tax Status, and Investment Objectives||11%||27|
|Opens Accounts, Transfers Assets, and Maintains Appropriate Account Records||11%||27|
|Provides Customers with Information on Investments and Makes Suitable Recommendations||28%||70|
|Obtains and Verifies Customers’ Purchase and Sales Instructions, Enters Orders, and Follows Up||23%||58|
Test results will be conveyed to the candidate on the same day with pass/fail status, the total equated score and a score break-up based on the five functional areas tested in the exam.
A link to sample FINRA conducted Series 7 can be accessed here. The questions can be extracted from here. https://www.finra.org/sites/default/files/Series_7_Content_Outline.pdf
On passing the Series 7 exam a candidate can register with self-regulatory agencies to trade in exchange traded funds(ETF), direct participation programs, investment company products, options-equity, index, foreign currency, collateralized mortgage obligations(CMO), municipal securities, warrants, rights, real estate investment trusts(REIT) and corporate stocks and bonds.
Activities that Series 7 exam passers can undertake also includes public offering and private placements of corporate securities, repos and certificates of accrual on government securities, direct participation programs, venture capital and hedge funds.