TheorySeries 7 Study Guide
Study for the Series 7 with exam topics, practice questions, a free PDF, video walkthrough and timed mock exam links.
How to study for Series 7
- Read the topic list so you know what the exam is likely to cover.
- Answer the free practice questions and read every explanation.
- Download the PDF for offline review.
- Use timed mock exams when your untimed practice feels comfortable.
Topics to review
- The core topics and terminology you'll be tested on
- Rules, standards and best-practice procedures
- Real-world scenarios and how to respond
- Common mistakes and how to avoid them
Try Series 7 questions now
Q1FINRA Rule 3120 states what is meant by a supervisory control system. Which of the following phrases most accurately describes it?
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✓ Correct answer: Policies and procedures are designed to check and confirm that written supervision procedures are operating effectively; any gaps identified are closed with amended or additional procedures.
According to FINRA Rule 3120, a supervisory control system is made up of policies and procedures designed to check and confirm that written supervision procedures governing day-to-day operations are effective. Where gaps are found, existing procedures are amended or additional procedures are developed to close the gaps.
Q2Which of the following is NOT a reason for the Registered Options Principal (ROP) to decline an account application?
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✓ Correct answer: Misdemeanor in a criminal background check
The ROP needs to be certain that a customer is financially stable enough to assume certain investment risk. Having a misdemeanor does not significantly affect a customer's source of wealth or source of income. However, if the customer had a criminal record with a larger and more related incident, for example a violation of SEC insider trading laws, then this should certainly be considered in the approval decision.
Q3Which tax is NOT flat rate?
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✓ Correct answer: gift tax
Gift tax is a progressive tax. Excise tax, gasoline tax, and general income tax are all level percentage taxes.
Q4Which of the following is not a requirement for an employee of one broker-dealer opening an account with another broker-dealer?
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✓ Correct answer: Duplicate mutual fund company statements must be sent to the employee’s broker-dealer.
Mandated by FINRA Rule 3210 for brokerage accounts, and supported by MSRB Rule G-28 for accounts dealing in municipal securities: Duplicate mutual fund company statements are not a requirement for an employee of one broker-dealer opening an account with another broker-dealer, whereas duplicate brokerage account statements and confirms must be sent to the employee’s broker-dealer upon request. Also, the employee’s broker-dealer must approve of the account before it is opened.
Q5Individuals applying for registration must meet the association’s requirements in all but which of the following areas?
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✓ Correct answer: age
Individuals applying for registration must meet the association’s requirements in training, competence, experience, and character. Anyone who fails to meet the association’s requirements in any of these areas may not become registered. .
Q6Two investors, John and Samantha, sign a contract to trade $100 for 10 shares of Company XYZ. Which of the following documents is produced in response to this specific event?
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✓ Correct answer: Trade agreement
The trade agreement is the formal contract that is created after a buyer and seller agree to a price for the purchase of a specified security. The other documents are related to other events either before or after this specific step in the trade process.
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