Series 7 Exam Requirements Structure License Cost

What is Series 7 Exam?

Anyone who is directly or indirectly involved in selling and trading securities needs to get their series 7 license. This goes for investment advisors who might directly be the ones advising the sale, as well as junior analysts or traders whose names will also appear on trade paperwork.

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Requirements of Series 7 Licence

The series 7 license is mandatory for traders to begin stockbroking in the United States. Although anyone over 18 is eligible to take the examination, a FINRA member firm or any other authorized self-regulatory firm (SRO) needs to sponsor them.

Key Takeaways

The Series 7 exam is the general securities examination that tests a candidate’s knowledge of investment products and trading.It is offered by FINRA and sponsored by an employer supervised by FINRA.The exam is considered the hardest and longest of all the securities licensing examinations. This examination is a prerequisite for many other exams like series 24, series 26, etc.

This typically means that a brokerage firm has already employed the candidate and is in a training period while they begin their studies. Also, the sponsorship must cover the exam fees and file the U4 form (Uniform Application for Securities Industry Registration or Transfer) for the candidate to get entry to the series 7 test.

The candidates also need to pass the Securities Industries Essentials exam (SIE), an entry-level exam that tests a candidate’s basic understanding of trading and regulatory practices. This is because the SIE is a co-requisite to the Series 7 test to get a full license. A candidate must pass both the exams to obtain registration as a General Securities Representative.

These are the only prerequisites to sit for the series 7 test. There is technically no degree requirement.

Exam Structure

The series 7 exam consists of 125 multiple choice questions in 3 hours and 45 minutes. This exam is also through online mode. But most importantly, the exam comprises four sections with the content and breakdown of the exam as follows:

Prospecting and Seeking Business for the Broker-Dealer from Customers and Potential Customers 9 questions – 7% Opening Accounts After Obtaining and Evaluating Customers’ Financial Profiles and Investment Goals 11 questions – 9%Providing Customers Information about Investments Making Investment Recommendations, Transferring Assets and Maintaining Appropriate Records 91 questions -73% Obtaining and Verifying Customer’ Purchase ,Sales Instructions and Agreements, Process completion and Confirming Transactions 14 questions- 11%

Section 3, which covers 73% of the exam, deals the most with securities. This section tests topics like portfolio theoryPortfolio TheoryAn investment model like modern portfolio theory or MPT allows investors to choose from a variety of investment options comprising of a single portfolio for earning maximum benefits and that too at a market risk which is way lower than the various underlying investments or assets.read more, EBITDAEBITDAEBITDA refers to earnings of the business before deducting interest expense, tax expense, depreciation and amortization expenses, and is used to see the actual business earnings and performance-based only from the core operations of the business, as well as to compare the business’s performance with that of its competitors.read more, profitability ratiosProfitability RatiosProfitability ratios help in evaluating the ability of a company to generate income against the expenses. These ratios represent the financial viability of the company in various terms.read more, balance sheetsBalance SheetsA balance sheet is one of the financial statements of a company that presents the shareholders’ equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner’s capital equals the total assets of the company.read more, inventory valuationInventory Valuation Inventory Valuation Methods refers to the methodology (LIFO, FIFO, or a weighted average) used to value the company’s inventories, which has an impact on the cost of goods sold as well as ending inventory, and thus has a financial impact on the company’s bottom-line numbers and cash flow situation.read more methods, etc.

Candidates also have to score a minimum of 72% marks to be qualified to obtain a series 7 license.

Series 7 License Cost

The cost of the exam itself is $245. The sponsoring firm typically pays this even though the student themselves can also pay. However, this cost does not include study materials, which the candidate needs to purchase themselves. Subsequently, study materials and books can range anywhere from $50 to $200.

Series 7 Pass Rate

Although the exact pass rates are not published, during the 2019 FINRA conference, FINRA announced that about 70% of students who had taken the exam that year had passed.

Important to Note

In years past, the exam was a 6 hour and 45-minute exam and cost $305 as an exam fee. However, the recent changes broke down the exam into two parts (GSE and SIE) and reduced the exam fees as well as duration.

Generally, Series 7 and SIE are prerequisites for other, more specialized exams. For example, series 7 is a prerequisite for series 4, which allows an individual to oversee options tradingOptions TradingOptions trading refers to a contract between the buyer and the seller, where the option holder bets on the future price of an underlying security or index.read more personnel.

This is important because as one furthers their financial career, they typically acquire more licenses. Series 4 and Series 24Series 24The Series 24 examination is for financial professionals planning to obtain a license for managing and supervising general securities at a broker-dealer.read more, for example, are required of professionals looking to manage other, more junior investment professionals. Such examinations are usually taken up by portfolio managersPortfolio ManagersA portfolio manager is a financial market expert who strategically designs investment portfolios.read more.

What is Series 7 Exam?#

Requirements of Series 7 Licence#

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Exam Structure#

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Series 7 Pass Rate#

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