The Series 7 exam is a standardized test that people take to become registered representatives in the securities industry. It covers various securities topics such as stocks, bonds, options, mutual funds, and more. The exam is administered by the Financial Industry Regulatory Authority (FINRA).
Read more as we will explore what the Series 7 exam covers in detail in today’s post.
Overview Of The Series 7 Exam
To become a certified securities industry professional, candidates need to complete the Series 7 exam which comprises 125 multiple-choice questions. Candidates have 225 minutes to complete the exam and must score at least 72% to pass. The exam evaluates a candidate’s expertise in various areas of the securities industry and their capacity to perform job functions related to selling and trading stocks, bonds, and securities.
The exam is divided into four main parts that cover different areas of the securities industry. The four sections are listed below:
- Securities Market Knowledge
- Investment Risk
- Securities Products
- Trading, Customer Accounts, And Prohibited Activities
Let’s take a closer look at each of these sections.
Securities Market Knowledge
The Series 7 exam’s first section focuses on the basics of the securities market. It covers topics such as how the market is organized, how different orders are processed, and the different types of orders that traders can place. Additionally, the test evaluates the candidate’s comprehension of the diverse types of securities and how they are traded.
This section also covers topics related to customer accounts, including account types, how to open and maintain accounts, and the procedures for identifying customers. The knowledge of margin accounts, as well as the applicable rules and regulations, will also be tested.
Investment Risk
The second section of the exam focuses on investment risk and the different factors that can impact investments. Candidates are tested on their understanding of risk management techniques, including diversification and asset allocation. They are also tested on their knowledge of different types of investment risks, such as market risk, credit risk, and liquidity risk.
In addition, this section covers topics related to investment products and how they are evaluated for risk. Candidates are tested on their understanding of investment objectives, the investment process, and how investment recommendations are made based on a client’s financial situation and risk tolerance.
Securities Products
The third section of the exam covers the different types of securities products that are available to investors. This includes stocks, bonds, mutual funds, options, and other types of securities. Candidates are tested on their knowledge of the characteristics of each type of security, including how they are priced and traded.
In addition, this section covers topics related to the issuance of securities, such as the underwriting process and the different types of offerings that are available. Candidates are also tested on their knowledge of the regulatory requirements surrounding securities offerings.
Trading, Customer Accounts, And Prohibited Activities
The fourth and final section of the exam covers trading, customer accounts, and prohibited activities. Candidates are tested on their knowledge of trade execution, including the rules and regulations surrounding trade settlement and clearance.
In addition, this section covers topics related to customer accounts, such as account documentation requirements and the different types of account transfers that are available. Candidates are also tested on their understanding of prohibited activities, including insider trading and market manipulation.
Preparing For The Series 7 Exam
Preparing for the Series 7 exam requires a significant amount of time and effort. Candidates can choose to study on their own or enroll in a preparatory course. Many companies offer Series 7 exam prep courses, which can be taken online or in-person.
Study materials for the exam include textbooks, practice exams, and flashcards. Some candidates may also benefit from working with a tutor or joining a study group.
To be specific, textbooks and study guides can provide candidates with an overview of the topics covered on the exam. Practice exams and flashcards can help candidates become familiar with the structure of the exam and types of questions they may encounter. And preparing by hiring a Series 7 exam tutor or joining a study group can help candidates stay motivated and get feedback on their progress.
As for which preparation method is the most effective, that is up to the individual. A combination of methods may be the best option for some candidates, while others may find that one method works better for them than another. Ultimately, candidates should choose the method(s) that work best for their unique learning style and goals.
Conclusion
The Series 7 exam is a comprehensive test that covers a wide range of topics related to the securities industry. Candidates who wish to become registered representatives must be knowledgeable in all areas covered by the exam, including securities market knowledge, investment risk, securities products, and trading, customer accounts, and prohibited activities.
Preparing for the exam requires a significant amount of time and effort, but with the right study materials and preparation, candidates can pass the exam and begin their careers in the securities industry. To learn how hard is the Series 7 exam, click on this link.