The Financial Industry Regulatory Authority (FINRA) requires the Series 7 license exam to all fledgling brokers.
The Series 7 Pass Rate is 65 percent. And most firms often allow four months to prepare for the exam.
It’s a computer based test where “[n]o two candidates’ exams are identical, because the items comprising the exams are randomly selected from the bank of test items” (FINRA “Series 7 Content Outline“).
Currently (2016), the test consists of 260 multiple choice questions – ten of those being pre-test questions – that cover a number of relevant topics to the industry.
1) Job Functions Covered
Other subjects this exam will cover include:
- Analyzing mutual funds
- handling customer accounts
- business cycle
- political contributions
- stock classification risks
- retirement accounts
- derivatives and several other topics.
Additionally, when taking your Series 7 exam, make sure you’re comfortable with the common terms used in the exam. You can look up and read the unfamiliar terms before sitting for the exam.
2) Series 7 Pass Rate
The Series 7 license test is often daunting to most students owing to the huge number of topics included. Again, even though the Series 7 Pass Rate is 65 percent, which is not very encouraging, continuous studying and understanding the various terms and principles covered in pre-test study materials will increase your chances of success.
Fortunately, those who fail have the ability to re-take the exam. However, you typically have to wait 30 days before re-taking it. After which a 90 day window is open for you to study and sit for the exam.
If you fail three times, you’ll then be required to wait 6 months in order to re-study and prepare for the test.
Also, since you’re required to have a sponsor (a FINRA – member firm or SRO), they’ll pay the $305 fee (was $290). However, you might be required to pay back the excess registration fees if re-taking the test often.
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3) What License Holders Can Do
The license allows the holder to sell these financial products:
- Real Estate Investment Trusts (REITs)
- Options-Equity, Index, and Foreign Currency
- Investment Company Products/Variable Contracts
- Corporate Stocks and Bonds
- Municipal Securities
- Direct Participation Programs
- Exchange Traded Funds (ETFs)
- Collateralized Mortgage Obligations (CMOs)
After being licensed for 2 years, you’ll have 120 days to complete Continual Education (CE) requirements via the Regulatory Element to remain a license holder. After which, these steps must be repeated every 3 years for the remainder of your career.