🧠 50 Essential Series 7 Exam Questions

Covering Core Topics: Suitability, Products, Regulations, Trading & More

The Series 7 Exam (General Securities Representative Exam) is a comprehensive test that covers a wide range of securities knowledge. These 50 essential practice questions are structured to reflect the real exam — with focus on application, ethics, and product knowledge — not just memorization.

Use these questions to identify strengths, reinforce weak areas, and get test-ready confidence.

📘 Section 1: Customer Accounts & Suitability (10 Questions)

1. A 67-year-old investor wants income with minimal risk. Which product is most suitable?
   🅐 High-yield bonds
   🅑 REITs
   🅒 Treasury bonds ✅
   🅓 Growth stocks
2. A client with a low risk tolerance wants moderate growth. Which is least appropriate?
   🅐 Balanced fund
   🅑 Large-cap stock fund
   🅒 Small-cap stock fund ✅
   🅓 Blue-chip dividend ETF
3. What document must a new customer sign to open a margin account?
   🅐 Arbitration agreement
   🅑 Margin agreement ✅
   🅒 Risk disclosure statement
   🅓 Hypothecation notice
4. A married couple opens a joint account. What registration type gives each spouse survivorship rights?
   🅐 JTWROS ✅
   🅑 TIC
   🅒 Community property
   🅓 Individual
5. Which account type is most appropriate for a minor?
   🅐 Margin account
   🅑 Roth IRA
   🅒 UGMA ✅
   🅓 Individual account
6. What is required when recommending a municipal bond to a client?
   🅐 A preliminary prospectus
   🅑 A feasibility study
   🅒 Suitability determination ✅
   🅓 Investment policy letter
7. A client in a high tax bracket needs tax-free income. Best choice?
   🅐 Municipal bond ✅
   🅑 Treasury bond
   🅒 GNMA
   🅓 Corporate bond
8. Which investment is not suitable for an investor needing liquidity?
   🅐 Money market fund
   🅑 T-bill
   🅒 Limited partnership ✅
   🅓 Blue-chip stock
9. What document summarizes investment objectives and trading authority?
   🅐 Customer agreement ✅
   🅑 Prospectus
   🅒 Statement of additional information
   🅓 Execution report
10. If a client refuses to provide financial info, what can a rep do?
    🅐 Proceed with only low-risk recommendations
    🅑 Open the account but make no recommendations ✅
    🅒 Decline the account
    🅓 Recommend mutual funds only

💼 Section 2: Products & Investment Risks (10 Questions)

11. Which product offers a fixed return and principal protection?
    🅐 Common stock
    🅑 Treasury bond ✅
    🅒 Preferred stock
    🅓 Variable annuity
12. Which instrument is most exposed to reinvestment risk?
    🅐 Zero-coupon bond
    🅑 Callable bond ✅
    🅒 TIPS
    🅓 Convertible bond
13. An investor wants monthly income with little principal fluctuation. Best choice?
    🅐 Preferred stock
    🅑 GNMA ✅
    🅒 Growth ETF
    🅓 High-yield fund
14. A zero-coupon bond investor is subject to:
    🅐 Reinvestment risk
    🅑 Current income taxation
    🅒 Phantom income tax ✅
    🅓 Inflation protection
15. What type of preferred stock pays missed dividends before common stock?
    🅐 Participating
    🅑 Cumulative ✅
    🅒 Callable
    🅓 Convertible
16. What is true of a closed-end fund?
    🅐 It issues and redeems shares daily
    🅑 It trades on exchanges ✅
    🅒 It’s only available through the issuer
    🅓 NAV always equals market price
17. What risk is highest in foreign bond ETFs?
    🅐 Credit
    🅑 Currency ✅
    🅒 Inflation
    🅓 Liquidity
18. A customer holds ADRs. What is the main risk?
    🅐 Inflation
    🅑 Political risk ✅
    🅒 Interest rate
    🅓 Prepayment
19. ETFs differ from mutual funds in that:
    🅐 ETFs are actively managed
    🅑 ETFs have sales loads
    🅒 ETFs trade intra-day ✅
    🅓 ETFs pay no dividends
20. A CMO is backed by:
    🅐 Equity portfolios
    🅑 Government bonds
    🅒 Mortgage loans ✅
    🅓 Real estate investment trusts

📜 Section 3: Trading & Execution (10 Questions)

21. What type of order guarantees execution but not price?
    🅐 Limit order
    🅑 Market order ✅
    🅒 Stop-limit
    🅓 Day order
22. An investor places a buy limit order at $30. The stock trades at $32. What happens?
    🅐 Order executes immediately
    🅑 Order is canceled
    🅒 Order remains open ✅
    🅓 Order converts to market order
23. What is a “not held” order?
    🅐 The firm must cancel after a day
    🅑 The firm has discretion on price/time ✅
    🅒 It’s a discretionary account
    🅓 It’s illegal
24. Who determines ex-dividend date for NYSE stocks?
    🅐 SEC
    🅑 FINRA ✅
    🅒 Exchange
    🅓 The issuer
25. A stock splits 2-for-1. What happens to the price?
    🅐 Doubles
    🅑 Halves ✅
    🅒 No change
    🅓 Increases by 10%
26. What is the bid-ask spread?
    🅐 Commission charged by broker
    🅑 Difference between offer and NAV
    🅒 Profit earned by market maker ✅
    🅓 Sales charge
27. A client sells short. What must they do?
    🅐 Own the stock first
    🅑 Deliver shares at settlement
    🅒 Borrow the shares ✅
    🅓 Place a limit order
28. In a long margin account, how much equity must a client deposit for a $20,000 purchase?
    🅐 $2,000
    🅑 $10,000
    🅒 $5,000 ✅
    🅓 $4,000
29. Which order is triggered by a stock’s price falling to a certain level?
    🅐 Buy stop
    🅑 Sell stop ✅
    🅒 Limit
    🅓 Fill or kill
30. What document confirms a trade’s final details?
    🅐 Confirmation ✅
    🅑 Prospectus
    🅒 Statement of additional info
    🅓 Order ticket

⚖️ Section 4: Regulations & Ethics (10 Questions)

31. Which act governs new securities issues?
    🅐 Securities Exchange Act of 1934
    🅑 Investment Company Act of 1940
    🅒 Securities Act of 1933 ✅
    🅓 Trust Indenture Act
32. When must a customer receive a prospectus for an IPO?
    🅐 Within 3 days of purchase
    🅑 At or before confirmation ✅
    🅒 Only upon request
    🅓 Before account approval
33. What is the purpose of Regulation T?
    🅐 Suitability enforcement
    🅑 Control mutual funds
    🅒 Set margin rules ✅
    🅓 Limit insider trading
34. Which of the following is a violation?
    🅐 Recommending mutual funds
    🅑 Failing to disclose a conflict of interest ✅
    🅒 Buying bonds for a retirement account
    🅓 Receiving a commission
35. How long must trade confirmations be retained?
    🅐 6 months
    🅑 3 years ✅
    🅒 5 years
    🅓 1 year
36. Who enforces rules on mutual fund advertising?
    🅐 SEC ✅
    🅑 MSRB
    🅒 NYSE
    🅓 SIPC
37. An associated person is suspended. What must happen?
    🅐 Their firm must fire them
    🅑 They can sell only fixed income
    🅒 They cannot function in any capacity ✅
    🅓 They may only supervise
38. When must a SAR (Suspicious Activity Report) be filed?
    🅐 Within 10 days
    🅑 Within 30 days ✅
    🅒 Immediately
    🅓 Annually
39. What is “selling away”?
    🅐 Trading outside of market hours
    🅑 Selling products not approved by the firm ✅
    🅒 Soliciting non-accredited investors
    🅓 Violating Regulation D
40. Which of the following is required to be recorded and reviewed?
    🅐 Conversations with clients
    🅑 Client complaints in writing ✅
    🅒 Verbal recommendations
    🅓 Trade confirmations

📈 Section 5: Portfolio Analysis & Economics (10 Questions)

41. What is beta?
    🅐 Return relative to bond yield
    🅑 Risk-free rate
    🅒 Volatility relative to market ✅
    🅓 Rate of inflation
42. What does the yield curve measure?
    🅐 Tax-exempt rates
    🅑 Maturity vs. interest rate ✅
    🅒 Volume of bond trades
    🅓 Stock growth
43. A defensive stock would be:
    🅐 Auto manufacturer
    🅑 Software firm
    🅒 Utility company ✅
    🅓 Luxury retailer
44. Which monetary policy tool is most often used?
    🅐 Open market operations ✅
    🅑 Reserve requirement
    🅒 Discount rate
    🅓 Tax policy
45. What does duration measure in bonds?
    🅐 Time to maturity
    🅑 Sensitivity to interest rates ✅
    🅒 Inflation protection
    🅓 Reinvestment rate
46. If the Fed buys Treasuries in the open market:
    🅐 Rates rise
    🅑 Money supply tightens
    🅒 Inflation falls
    🅓 Rates fall ✅
47. A well-diversified portfolio reduces:
    🅐 Systematic risk
    🅑 Nonsystematic risk ✅
    🅒 Inflation risk
    🅓 Political risk
48. What is alpha?
    🅐 Return vs. benchmark performance ✅
    🅑 Market volatility
    🅒 Bond yield
    🅓 Tax-adjusted return
49. A steep yield curve suggests:
    🅐 Inflation is low
    🅑 Recession is near
    🅒 Strong economic growth ✅
    🅓 Corporate bond demand is weak
50. What happens to bond prices when interest rates rise?
    🅐 Prices rise
    🅑 Prices fall ✅
    🅒 Coupons increase
    🅓 NAV increases

📥 Want More Practice?

These questions reflect the depth and scope of the Series 7 exam — product knowledge, regulation, trading, and client interaction. For complete mock exams, video lessons, and targeted drills:

👉 Access full Series 7 prep at FINRA Exam Mastery