General Securities Representative Exam (Series 7) Flashcards
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How much time are you given for the Series 7 exam?
225 minutes (3 hours and 45 minutes).
What score is required to pass the Series 7?
72%.
What is the Series 7 exam fee?
$300.
What rights does a call option give the holder?
The right to BUY the underlying stock at the strike price. Buyers are bullish; sellers (writers) are bearish.
What rights does a put option give the holder?
The right to SELL the underlying stock at the strike price. Buyers are bearish; sellers (writers) are bullish.
What is the difference between a primary and secondary market?
Primary market: issuer sells new securities to raise capital (IPOs). Secondary market: investors trade existing securities among themselves (exchanges, OTC).
What is a municipal bond's key tax advantage?
Interest is exempt from federal income tax (and often state/local tax for in-state residents). Capital gains are still taxable.
What happens to a bond's price when interest rates rise?
Bond prices fall (inverse relationship). Longer maturities and lower coupons are more sensitive to rate changes.
Distinguish systematic from unsystematic risk.
Systematic (market) risk affects the whole market and can't be diversified away. Unsystematic (specific) risk is company/industry-specific and can be reduced through diversification.
What is the Securities Act of 1933 primarily concerned with?
The primary market — registration and full disclosure of new securities issues (prospectus requirements). Often called the 'paper act.'
What does the Securities Exchange Act of 1934 regulate?
The secondary market — it created the SEC and regulates exchanges, broker-dealers, insider trading, and market manipulation.
How many scored questions are on the Series 7 exam?
125 scored questions.
What is the difference between a market order and a limit order?
A market order executes immediately at the best available price. A limit order executes only at a specified price or better, but may not fill.