Series 7 Study Guide

7% of the exam, 9 scored questions.

• Communications: retail, institutional and correspondence; which require principal pre-approval and filing under FINRA Rule 2210.
• Research reports, quiet periods and seminars; options communications and delivery of the Options Disclosure Document.
• New issues: registration statement, red herring, final prospectus, cooling-off period rules and what you may say before effectiveness.
• Municipal primary market: competitive vs. negotiated sales, official statements, syndicate roles, spread components.
• Exempt offerings: Regulation D, Regulation A, Rule 144A, Section 3(a)(11) intrastate.

Common trap: Treating an unsolicited indication of interest as a binding order during the cooling-off period.

Deep dive + practice questions: F1: Seeks Business for the Broker-Dealer

9% of the exam, 11 scored questions.

• Account types and registrations, including TIC vs. JTWROS, community property, trusts, estates and corporate accounts.
• Retirement accounts: IRAs, rollovers vs. transfers, employer plans and ERISA basics.
• Customer identification (CIP), KYC, and the customer investment profile under Reg BI and FINRA Rule 2111.
• Account authorizations: power of attorney, trading authorization, discretionary accounts.
• Principal approval for account opening and when to refuse or restrict an account.

Common trap: Forgetting that Reg BI’s care obligation applies to recommendations to retail customers, including recommendations of account type.

Deep dive + practice questions: F2: Opens Accounts / Evaluates Customer Profile

73% of the exam, 91 scored questions.

• Equity: stock types, rights of common and preferred holders, rights and warrants, ADRs, penny-stock rules, cost basis and wash sales.
• Debt: yields (nominal, current, YTM, YTC, YTW), ratings, OID, convertibles and conversion parity; Treasuries, TIPS, STRIPS, agencies and CMOs.
• Municipal securities: GO vs. revenue analysis, call and refunding features, tax treatment and taxable-equivalent yield.
• Options: payoffs, breakevens, max gain and loss for long and short calls and puts, covered calls, protective puts, spreads and straddles.
• Packaged products: mutual fund pricing and breakpoints, variable annuities (accumulation vs. annuity units, AIR), REITs, DPPs and alternatives.
• Portfolio theory and fundamental analysis: diversification, alpha/beta, CAPM, balance-sheet and income-statement ratios.

Common trap: Computing an options breakeven correctly but forgetting to ask whether the position is bullish or bearish, which is what the question is really testing.

Deep dive + practice questions: F3: Provides Investment Information, Makes Suitable Recommendations

Topic pages: options, municipal securities, suitability and Reg BI.

11% of the exam, 14 scored questions.

• Order handling: order types, trade capacity, best execution, and trade reporting.
• Confirmations and account statements; settlement dates (T+1 regular way); good delivery.
• Margin (outline section 4.4): Reg T initial requirement, FINRA 4210 maintenance, debit and credit balances, SMA and buying power.
• Customer complaints, errors and corrections.

Common trap: Applying the long-account maintenance percentage to a short account; FINRA’s maintenance rules differ for short positions.

Deep dive + practice questions: F4: Obtains and Processes Transaction Instructions Also see margin accounts and formulas.