Series 7 Exam Questions: Sample Problems to Test Your Knowledge

Financial advisors who recommend specific securities to clients must pass the FINRA Series 7 exam. This multiple-choice exam features 125 scored questions and 10 unscored pre-test questions covering core securities concepts. Completing Series 7 sample questions as part of your study prep can offer insight into what to expect when it’s time to sit for the exam.

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Series 7 Sample Questions

Several online sources offer Series 7 example questions and practice tests that advisors can access for free. The following Series 7 practice questions are gleaned from a variety of sources, including Kaplan, Achievable, Mometrix and The Securities Institute of America. After you test your knowledge, scroll to the bottom for the answer key.

Question 1: A registered representative receives a call from a client who’s interested in buying shares of a high-profile IPO. The representative should:

A. Discuss and review suitability for the client’s portfolio
B. Talk them into buying something else
C. Refuse the order
D. Accept the order but only if the trade executes through a margin account

Question 2: A feasibility study would most likely be needed to evaluate the success of which type of municipal bond building project?

A. An elementary school
B. A park and public garden
C. A water treatment facility
D. A library

Question 3: A client wants to purchase a 9.00% $100 par preferred stock with a current yield of 11.53%. What is the stock’s market price?

A. $71.05
B. $78.04
C. $81.38
D. $86.97

Question 4: A registered representative drafts a letter offering a one-time checkup to discuss retirement planning with clients. The representative shares the letter with his colleagues, who provide positive feedback. He then forwards the letter to 21 retail clients. What statement is true?

A. A copy of the communication must be kept on file for two years
B. Pre-approval was not required from the firm’s principal
C. The communication is considered a retail communication
D. FINRA pre-approval was required before sending

Question 5: Regulation S would allow a domestic securities issuer to avoid registration when which of the following is true?

A. The offering occurs outside of the U.S.
B. The offering is made only to accredited investors
C. A non-public offering is made
D. The offering is made only in one state

Question 6: Excessive trading in a customer’s account exclusively to generate commissions is called:

A. Churning
B. Rebalancing
C. Market timing
D. Front running

Question 7: Correspondence is defined as any written communication that is distributed to:

A. 10 or fewer retail investors within any 10-day period
B. 15 or fewer retail investors within any 20-day period
C. 25 or fewer retail investors within any 30-day period
D. 30 or fewer retail investors within any 25-day period

Question 8: A client wants to place a stop order for 100 shares of XYZ stock. Their representative would:

A. Sell the shares at the best price available
B. Sell the shares, currently trading at $50, if the price drops to $45
C. Buy 100 shares at the best price available
D. Buy 100 shares at $40 or less

Question 9: An investor is long 500 shares of XYZ stock. XYZ Company plans to offer new shares to finance an expansion project. Each share of stock receives one right to purchase the new shares. Two rights and $28 are required to purchase the new shares. The stock is trading at $30 per share. How much is each right worth?

A. $1
B. $2
C. $0.50
D. $2, less the exercise fee paid to the rights agent

Question 10: A U.S. importer plans to purchase $15 million worth of goods from a Japanese supplier. They plan to pay the invoice in Japanese yen six months from the date of delivery. Which of the following would the importer do to hedge themselves?

A. Buy puts on the U.S. dollar
B. Buy calls on the U.S. dollar
C. Buy puts on the Japanese yen
D. Buy calls on the Japanese yen

Series 7 Sample Questions Answer Key

Answers	Explanation
Question 1: A	FINRA Rule 2111 requires registered representatives to discuss suitability with clients and perform due diligence to assess the risks before making investment recommendations.
Question 2: C	Water treatment facility bonds are a type of revenue bond, meaning any revenues generated are used to pay off the bond. A feasibility study matters for assessing the profitability of such a project.
Question 3: B	The current yield formula is annual dividend divided by market price. $9.00 / 11.53% = $78.04
Question 4: B	Correspondence is subject to review, but doesn’t require pre-approval by a principal or FINRA.
Question 5: A	Regulation S allows issuers to avoid SEC registration if they sell securities outside of the U.S. to non-U.S. residents.
Question 6: A	Churning is excessive trading in a customer’s account for no other reason than to generate commissions.
Question 7: C	Correspondence means any written communication (including electronic) that is sent to 25 or fewer retail investors within any 30-day period.
Question 8: B	A stop order is activated when the stock hits the specified stop price or moves beyond it. Here, XYZ is trading at $50, and the order would be triggered if the price falls to $45. At that point, it becomes a sell stop order.
Question 9: A	To calculate the value of a right, subtract the subscription price from the market price and divide by the number of rights required to purchase one share: $30 – $28 = $2 $2 / 2 = $1
Question 10: D	U.S. importers buy calls on the foreign currency they’re transacting in to hedge themselves.

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How to Study for the Series 7 Exam

The amount of time you need to prepare for the Series 7 exam can depend on your background, education and experience level. Your commitment to regular study prep, as well as your learning style and the types of educational resources you have access to can make a difference.

That being said, here’s an outline of what a typical Series 7 study plan might look like:

1. Meet the Prerequisites

Before you can take the Series 7 exam, you must pass the Securities Industry Essentials (SIE) exam. This exam, which has a $100 fee, tests your basic knowledge of the securities industry. You can register for this exam through FINRA.

2. Choose a Study Method

There are two basic approaches to Series 7 exam prep: develop your own self-study program or enroll in a structured program. Structured programs are largely offered on-demand online, though some may include virtual or in-person instructor-led classes.

A self-study plan has the advantage of being made to fit your schedule. The drawback is that you’ll need to locate and purchase study materials yourself. And you’ll need to be disciplined about mapping out and sticking to your plan.

Exam prep courses can provide everything you need to study for the Series 7, including practice tests, textbooks, videos and other materials. You’ll typically pay one fee for everything, and the cost may be tiered based on which course features or materials you need.

Here are more details about four popular Series 7 exam prep providers:

Provider	Description	Cost
Kaplan	Choose from basic or essential self-study packages that include prep materials, or a premium option that includes expert-led courses taught live or on-demand	$139 for Basic $189 for Essential $308 for Premium
Achievable	A single, comprehensive course that includes an online textbook, more than 3,700 chapter quizzes, 35+ full-length practice exams and 39 bonus videos, access to an AI tutor	$199
Mometrix	Subscription-based exam prep that includes 160+ study lessons, 910 practice questions, 870+ flashcards, detailed answer explanations, bonus resources for improving study skills and a 7-day money back guarantee	$59.99/month
Securities Institute of America	Choose from a la carte options or a complete exam prep course that includes 20+ hours of video training, 5,200+ practice questions with explanations, a 624-page study guide, real exam simulation and reporting, chat and call support	$149 for video course and practice exam package $209 for textbook and exam prep test bank $289 for complete exam prep course

3. Familiarize Yourself With Core Areas and Categories

The Series 7 includes questions that span four major job functions and multiple product categories. The job functions are:

Seeking Business
Opening Accounts
Making Recommendations
Processing Transactions

Product categories that feature heavily on the exam include options, municipal securities, investment companies and direct participation programs (DPPs). Each job function area carries a different weight for scoring, with making recommendations having the biggest impact.

If you’re using Series 7 sample questions to study, pay attention to which job functions and product categories they address. You may choose to spend more time studying concepts in the highest-weighted exam areas to ensure you thoroughly understand them before completing any practice questions.

4. Read/Watch First, Take Notes Second

Whether you’re using study materials you purchased yourself or ones offered by your exam prep program, consider a two-phase approach to learning the material.

First, read (or watch) the material without taking notes and with your full attention. Then, reread or rewatch, pausing when necessary, to take notes for each section or chapter. When you’ve finished taking notes for one section, mentally quiz yourself on what you wrote then check to see how well you remembered it.

Repetition and recitation can help you retain the information you’re learning. Including visuals in your notes, such as charts, graphs or idea maps, can also be helpful if you tend to absorb material more readily from seeing vs. hearing.

5. Don’t Rely on Practice Questions Alone

Completing Series 7 sample questions can be a helpful part of your study practice, but it could be a mistake to rely on them alone to prepare for the exam. For one thing, sample questions are just that: samples. They’re not the actual questions you may encounter on the exam, and you may feel frustrated on exam day if you don’t see questions that resemble them.

A better approach is to aim for a specific percentage of questions right on each practice exam or quiz you take. For example, you might shoot for 80% each time. Hitting that goal consistently and focusing on the core concepts you’re being tested on can help you feel more confident going into exam day.

6. On Test Day

A little strategy can also be helpful when you’re ready to take the exam. Here are three quick tips to help you feel more confident on test day:

Read each question word-for-word to make sure you understand what it’s asking.
Review each answer to eliminate ones you know right away are incorrect.
Trust your gut when choosing a final answer, and don’t leave any questions blank.

What happens if you don’t get the result you’re after? You can retake the Series 7 exam if needed. You’ll need to wait 15 days after your first and second failed attempts, or 60 days after your third and subsequent failed attempts. There’s no total limit on how many times you can take the test, but you will need to pay the $395 registration fee each time.

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Frequently Asked Questions (FAQs)

Do RIAs Need to Take the Series 7 Exam?

Registered investment advisors need to take the Series 7 if they trade securities on behalf of their clients. RIAs also need to complete the Series 65 exam to offer investment advice to clients for a fee.

What Is the Series 7 Pass Rate?

FINRA doesn’t regularly publish details about the Series 7 pass rate. One estimate from 2019 puts the figure at 71%, which is similar to the Series 65 pass rate. That number illustrates how difficult the exam may be for some advisors and the importance of a solid study plan.

Is Series 7 Exam Prep Worth It?

Investing in Series 7 exam prep through a professional provider like Kaplan or Achievable could be worth it if you’d like access to a structured study plan, with all the necessary materials included. Many Series 7 exam prep courses allow students to work through the study materials at their own pace, which is a benefit for working advisors who need a flexible schedule.

Bottom Line

Series 7 sample questions can offer a guide on what to expect when it’s time for the real thing, but they’re just one part of a comprehensive study plan. If you’re gearing up to take the Series 7, consider how much time you can dedicate to studying daily or weekly so that you allow yourself enough space between exam registration and test day to prepare.

Tips for Marketing Advisory Services

Earning a securities license could help you attract more clients to your business. You may also choose to pursue other professional certifications, such as a CFP® mark or Chartered Financial Analyst (CFA) designation. Earning those types of credentials also requires an exam, but you can find practice test questions online to help you learn the material.
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