WILEY SERIES 7 EXAM REVIEW 2016

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3 WILEY SERIES 7 EXAM REVIEW 2016

4 WILEY FINRA SERIES This series includes the following titles: Wiley Series 3 Exam Review Test Bank: National Commodities Futures Examination Wiley Series 4 Exam Review Test Bank: The Registered Options Principal Examination Wiley Series 6 Exam Review Test Bank: The Investment Company and Variable Contracts Products Representative Examination Wiley Series 7 Exam Review Test Bank: The General Securities Representative Examination Wiley Series 9 Exam Review Test Bank: The General Securities Sales Supervisor Examination Option Module Wiley Series 10 Exam Review Test Bank: The General Securities Sales Supervisor Examination General Module Wiley Series 24 Exam Review Test Bank: The General Securities Principal Examination Wiley Series 26 Exam Review Test Bank: The Investment Company and Variable Contracts Products Principal Examination Wiley Series 55 Exam Review Test Bank: The Equity Trader Examination Wiley Series 62 Exam Review Test Bank: The Corporate Securities Representative Examination Wiley Series 63 Exam Review Test Bank: The Uniform Securities State Law Examination Wiley Series 65 Exam Review Test Bank: The Uniform Investment Adviser Law Examination Wiley Series 66 Exam Review Test Bank: The Uniform Combined State Law Examination Wiley Series 99 Exam Review Test Bank: The Operations Professional Examination For more on this series, visit the website at

5 WILEY SERIES 7 EXAM REVIEW 2016 The General Securities Representative Examination The Securities Institute of America, Inc.

6 Cover Design: Wiley Cover Image: istockphoto.com / LuisB Copyright 2016 by The Securities Institute of America, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Previous editions published by The Securities Institute of America, Inc. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) , fax (978) , or on the Web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) , fax (201) , or online at Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) , outside the United States at (317) , or fax (317) Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-ondemand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at For more information about Wiley products, visit ISBN (Paperback) ISBN (epdf) ISBN (epub) Printed in the United States of America

7 Contents ABOUT THE SERIES 7 EXAM xxiii ABOUT THIS BOOK xxvii ABOUT THE TEST BANK xxviii ABOUT THE SECURITIES INSTITUTE OF AMERICA xxix CHAPTER 1 EQUITY SECURITIES 1 What Is a Security? 1 Equity = Stock 2 Common Stock 2 Preferred Stock 14 Currency Risks 22 Functions of the Custodian Bank Issuing ADRs 23 Real Estate Investment Trusts (REITs) 23 Non-Traded REITs 24 Pretest 25 CHAPTER 2 DEBT SECURITIES 29 Corporate Bonds 29 Types of Bond Issuance 30

8 vi Contents Bond Certificate 31 Bond Pricing 31 Corporate Bond Pricing 32 Bond Yields 32 Yield Spreads 36 The Real Interest Rate 37 Bond Maturities 37 Types of Corporate Bonds 38 Converting Bonds into Common Stock 41 Advantages of Issuing Convertible Bonds 42 Disadvantages of Issuing Convertible Bonds 42 Convertible Bonds and Stock Splits 42 Reverse Convertible Securities 42 Forced Conversion 43 The Trust Indenture Act of Bond Indenture 43 Ratings Considerations 44 Retiring Corporate Bonds 44 Collateralized Mortgage Obligation (CMO) 46 CMOs and Interest Rates 47 Types of CMOs 47 Private-Label CMOs 49 Exchange-Traded Notes (ETNs) 49 Euro and Yankee Bonds 50 Pretest 51 CHAPTER 3 GOVERNMENT SECURITIES 55 Series EE Bonds 55 Series HH Bonds 56 Treasury Bills, Notes, and Bonds 56 Treasury Bond and Note Pricing 57 Treasury Strips 58

9 Contents vii Treasury Receipts 58 Treasury Inflation-Protected Securities (TIPS) 59 Agency Issues 59 Government National Mortgage Association (GNMA) 59 Federal National Mortgage Association (FNMA) 60 Federal Home Loan Mortgage Corporation (FHLMC) 60 Federal Farm Credit System (FFCS) 60 Sallie Mae 61 Pretest 63 CHAPTER 4 MUNICIPAL SECURITIES 65 Municipal Bonds 65 Types of Municipal Bonds 66 Issuing Municipal Securities 70 Selecting an Underwriter 70 Creating a Syndicate 71 Syndicate Accounts 72 Submitting the Syndicate Bid 73 Determining the Reoffering Yield 73 Awarding the Issue 74 Underwriter s Compensation 74 Order Period 76 Allocation Municipal Bond Orders 76 Sale Date 77 When Issued Confirmations 78 Final Confirmations 78 Other Types of Municipal Underwritings 79 Syndicate Operation and Settlement 79 The Official Statement 80 Bond Counsel 81 The Legal Opinion 81 Potential Conflicts of Interest for Municipal Bond Underwriters 82

10 viii Contents Acting as a Financial Adviser to the Issuer 82 Information Obtained While Acting as a Fiduciary 82 Acting as a Financial Adviser and an Underwriter 83 Political Contributions 83 Municipal Bond Trading 85 Bona Fide Quotes 85 Informational Quotes 86 Out Firm Quotes 86 Executing a Customer s Municipal Bond Orders 87 Customer Confirmations 88 Yield Disclosure 89 Sources of Municipal Bond Market Information 89 Recommending Municipal Bonds 90 Taxation of Municipal Bonds 90 Tax Equivalent Yield 91 Purchasing a Municipal Bond Issued in the State in which the Investor Resides 91 Triple Tax Free 92 Original Issue Discount (OID) and Secondary Market Discounts 92 Amortization of a Municipal Bond s Premium 92 Bond Swaps 93 Analyzing Municipal Bonds 93 Analyzing General Obligation Bonds 93 The Debt Statement 94 Community Factors 95 Sources of Tax Revenue 95 Determining Property Taxes 96 Important Financial Ratios for General Obligation Bonds 96 Analyzing Revenue Bonds 97 Types of Revenue Pledge 97 Municipal Fund Securities 98 Municipal Securities Rulemaking Board (MSRB) 99 Pretest 103

11 Contents ix CHAPTER 5 THE MONEY MARKET 109 Money Market Instruments 109 Corporate Money Market Instruments 109 Government Money Market Instruments 111 Municipal Money Market Instruments 112 International Money Market Instruments 112 Interest Rates 112 Pretest 115 CHAPTER 6 ECONOMIC FUNDAMENTALS 117 Gross Domestic Product (GDP) 117 Recession 119 Depression 119 Economic Indicators 119 Schools of Economic Thought 121 Economic Policy 122 Tools of The Federal Reserve Board 122 Fiscal Policy 125 Consumer Price Index (CPI) 126 Inflation/Deflation 126 Real GDP 126 International Monetary Considerations 127 Yield Curve Analysis 127 Pretest 129 CHAPTER 7 OPTIONS 133 Option Classification 133 Option Classes 134 Option Series 134 Bullish vs. Bearish 134

12 x Contents Possible Outcomes for an Option 135 Characteristics of All Options 136 Managing an Option Position 136 Buying Calls 137 Selling Calls 138 Buying Puts 140 Selling Puts 141 Option Premiums 143 At the Money Options 143 Out of the Money Options 144 Intrinsic Value and Time Value 144 Using Options as a Hedge 145 Long Stock Long Puts/Married Puts 145 Long Stock Short Calls/Covered Calls 147 Maximum Gain Long Stock Short Calls 148 Maximum Loss Long Stock Short Calls 149 Short Stock Long Calls 149 Maximum Gain Short Stock Long Calls 150 Maximum Loss Short Stock Long Call 151 Short Stock Short Puts 151 Maximum Gain Short Stock Short Puts 152 Maximum Loss Short Stock Short Puts 153 Multiple Option Positions and Strategies 154 Long Straddles 154 Short Straddles 156 Spreads 158 Combinations 169 Using a T Chart to Evaluate Option Positions 170 Index Options 174 Interest Rate Options 176 Price-Based Options 176 Rate-Based Options 178 Foreign Currency Options 178 The Option Clearing Corporation 180

13 Contents xi The Options Markets 181 The Chicago Board Option Exchange 181 Opening and Closing Option Prices 183 Order Execution 183 Expiration and Exercise 184 American vs. European Exercise 184 Market Volatility Options/VIX 185 Flex Options 185 Weekly Options 186 Position and Exercise Limits 186 Stock Splits and Stock Dividends 187 Taxation of Options 188 Closing an Option Position 188 Exercising a Call 188 Exercising a Put 188 Protective Puts 188 Covered Calls 189 Option Compliance 189 Option Agreement 189 Pretest 191 CHAPTER 8 MUTUAL FUNDS 199 Investment Company Philosophy 199 Types of Investment Companies 200 Open-End vs. Closed-End Funds 201 Diversified vs. Nondiversified 202 Investment Company Registration 203 Investment Company Components 205 Mutual Fund Distribution 207 Selling Group Member 207 Distribution of No-Load Mutual Fund Shares 208 Distribution of Mutual Fund Shares 208

14 xii Contents Mutual Fund Prospectus 208 Characteristics of Open-End Mutual Fund Shares 210 Mutual Fund Investment Objectives 210 Other Types of Funds 212 Alternative Funds 212 Floating Rate Bank Loan Funds 213 Bond Funds 213 Valuing Mutual Fund Shares 215 Changes in the NAV 216 Sales Charges 216 Calculating a Mutual Fund s Sales Charge Percentage 219 Finding the Public Offering Price 219 Sales Charge Reductions 220 Breakpoint Schedule 220 Letter of Intent 221 Backdating a Letter of Intent 221 Breakpoint Sales 221 Rights of Accumulation 222 Automatic Reinvestment of Distributions 222 Other Mutual Fund Features 223 Cost Base of Multiple Purchases 227 Purchasing Mutual Fund Shares 228 Sales Charges Day Free Look 231 Withdrawal Plans 231 Recommending Mutual Funds 232 Pretest 235 CHAPTER 9 VARIABLE ANNUITIES 241 Annuities 241 Equity Indexed Annuity 244 Recommending Variable Annuities 245

15 Contents xiii Annuity Purchase Options 246 Accumulation Units 247 Annuity Units 247 Annuity Payout Options 247 Factors Affecting the Size of the Annuity Payment 249 The Assumed Interest Rate (AIR) 249 Taxation 250 Types of Withdrawals 250 Annuitizing the Contract 250 Expenses and Guarantees 251 Other Charges 251 Pretest 253 CHAPTER 10 ISSUING CORPORATE SECURITIES 257 The Securities Act of The Prospectus 258 The Final Prospectus 258 Prospectus to Be Provided to Aftermarket Purchasers 259 SEC Disclaimer 259 Misrepresentations 260 Tombstone Ads 260 Free Riding and Withholding/FINRA Rule Underwriting Corporate Securities 262 Types of Underwriting Commitments 262 Types of Offerings 264 Awarding the Issue 264 The Underwiting Syndicate 265 Selling Group 265 Underwriter s Compensation 265 Private Placements/Regulation D Offerings 267 Rule Private Investment in a Public Equity (PIPE) 269

16 Contents Regulation A Offerings 270 Rule Rule 147 Intrastate Offering 271 Pretest 273 CHAPTER 11 TRADING SECURITIES 277 Types of Orders 277 The Exchanges 281 Priority of Exchange Orders 281 The Role of The Designated Market Maker/DMM 282 The DMM Acting as a Principal 282 The Designated Market Maker/DMM Acting as an Agent 283 Crossing Stock 284 Do Not Reduce (DNR) 285 Adjustments for Stock Splits 285 Stopping Stock 286 Commission House Broker 287 Two-Dollar Broker 287 Registered Traders 287 Super Display Book (SDBK) 287 Short Sales 288 Rule 200 Definitions and Order Marking 288 Rule 203 Security Borrowing and Delivery Requirements 290 Threshold Securities 290 Listing Requirements for the NYSE 292 Over the Counter/Nasdaq 292 Market Makers 292 Nasdaq Subscription Levels 293 Nasdaq Quotes 293 Nominal Nasdaq Quotes 294 Automated Confirmation System (ACT)/Trade Reporting Facility (TRF) 295 Nasdaq Execution Systems 295 The Nasdaq Market Center Execution System (NMCES) 295

17 Contents xv The Nasdaq Opening Cross 295 Non-Nasdaq OTCBB 296 Pink OTC Market 297 Third Market 297 Fourth Market 297 Reading the Consolidated Tape 298 Exchange Qualifiers 299 Broker vs. Dealer 299 FINRA 5% Markup Policy 300 Markups/Markdowns When Acting as a Principal 301 Riskless Principal Transactions 302 Proceeds Transactions 302 The Order Audit Trail System (OATS) 302 Trade Reporting and Compliance Engine (TRACE) 303 Circuit Breakers 303 Limit Up Limit down (LULD) 304 Arbitrage 304 Pretest 307 CHAPTER 12 CUSTOMER ACCOUNTS 311 Holding Securities 313 Mailing Instructions 314 Types of Accounts 315 Commingling Customer s Pledged Securities 325 Wrap Accounts 326 Regulation S-P 326 Day Trading Accounts 327 Pretest 329 CHAPTER 13 MARGIN ACCOUNTS 333 Regulation of Credit 333 Regulation T 333

18 xvi Contents House Rules 336 Establishing a Long Position in a Margin Account 336 An Increase in the Long Market Value 337 Special Memorandum Account (SMA) Long Margin Account 339 A Decrease in the Long Market Value 341 Minimum Equity Requirement Long Margin Accounts 341 Establishing a Short Position in a Margin Account 342 A Decrease in the Short Market Value 343 Special Memorandum Account (SMA) Short Margin Account 344 An Increase in the Short Market Value 345 Minimum Equity Requirement Short Margin Accounts 346 Combined Margin Accounts 347 Portfolio Margin Accounts 347 Securities Backed Lines of Credit 348 Pretest 349 CHAPTER 14 RETIREMENT PLANS 353 Individual Plans 353 Individual Retirement Accounts (IRAs) 354 Traditional IRAs 354 Roth IRAs 355 Simplified Employee Pension IRA (SEP IRA) 356 Educational IRA/Coverdell IRA 358 Tax-Sheltered Annuities (TSAs)/Tax-Deferred Accounts (TDAs) 362 Corporate Plans 364 Rolling Over a Pension Plan 366 Employee Retirement Income Security Act of 1974 (ERISA) 366 Erisa 404C Safe Harbor 368 Pretest 369

19 Contents xvii CHAPTER 15 BROKERAGE OFFICE PROCEDURE 373 Executing an Order 373 Customer Confirmations 375 Clearly Erroneous Reports 376 Execution Errors 376 Corporate and Municipal Securities Settlement Options 376 RVP/DVP/COD 377 When-Issued Securities 377 Government Securities Settlement Options 378 Accrued Interest 378 Calculating Accrued interest 379 Accrued Interest for Government Notes and Bonds 380 Rules for Good Delivery 381 Delivery of Round Lots 382 Delivery of Bond Certificates 382 Rejection of Delivery 383 Don t Know (DK) Procedures 383 Fail to Deliver/Fail to Receive 383 Due Bills 383 Customer Account Statements 384 Carrying of Customer Accounts 384 Proxies 385 Pretest 387 CHAPTER 16 FUNDAMENTAL AND TECHNICAL ANALYSIS 393 Fundamental Analysis 393 The Balance Sheet 394 Industry Fundamentals 401 Top Down and Bottom Up Analysis 402

20 xviii Contents Technical Analysis 402 Market Theories and Indicators 406 Efficient Market Theory 407 Pretest 409 CHAPTER 17 DIRECT PARTICIPATION PROGRAMS 411 Limited Partnerships 411 Structuring and Offering Limited Partnerships 413 Types of Limited Partnerships 414 Oil and Gas Sharing Arrangements 416 Equipment Leasing Programs 416 Tax Reporting for Direct Participation Programs 417 Limited Partnership Analysis 417 Tax Deductions vs. Tax Credits 418 Other Tax Considerations 418 Dissolving a Partnership 418 Pretest 421 CHAPTER 18 CUSTOMER RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 425 Professional Conduct in the Securities Industry 426 Fair Dealings with Customers 426 Periodic Payment Plans 431 Mutual Fund Current Yield 431 Information Obtained from an Issuer 431 Disclosure of Client Information 432 Borrowing and Lending Money 432 Gift Rule 432 Outside Employment 433 Private Securities Transactions 433

21 Contents xix Customer Complaints 433 Investor Information 434 NYSE/FINRA Know Your Customer 434 Investment Objectives 435 Risk vs. Reward 437 Alpha 439 Beta 439 Products Made Available through Member Firms 439 Recommendations through Social Media 440 Tax Structure 442 Investment Taxation 442 Calculating Gains and Losses 442 Cost Base of Multiple Purchases 443 Deducting Capital Losses 444 Wash Sales 444 Taxation of Interest income 445 Inherited Securities 445 Donating Securities to Charity 446 Gift Taxes 446 Estate Taxes 446 Withholding Tax 446 Corporate Dividend Exclusion 447 Alternative Minimum Tax (AMT) 447 Taxes on Foreign Securities 447 Pretest 449 CHAPTER 19 SECURITIES INDUSTRY RULES AND REGULATIONS 455 The Securities Exchange Act of The Securities and Exchange Commission (SEC) 456 Extension of Credit 457 The National Association of Securities Dealers (NASD) 457 Becoming a Member of FINRA 459

22 xx Contents Hiring New Employees 460 Disciplinary Actions Against a Registered Representative 461 Resignation of a Registered Representative 462 Continuing Education 462 Termination for Cause 464 Retiring Representatives/Continuing Commissions 464 State Registration 464 Registration Exemptions 465 Persons Ineligible to Register 465 Communications with the Public 465 FINRA Rule 2210 Communications with the Public 466 Broker Dealer Websites 469 Blind Recruiting Ads 470 Generic Advertising 470 Tombstone Ads 470 Testimonials 471 Free Services 471 Misleading Communication with the Public 472 Securities Investor Protection Corporation Act of Net Capital Requirement 472 Customer Coverage 473 Fidelity Bond 473 The Securities Acts Amendments of The Insider Trading & Securities Fraud Enforcement Act of Firewall 474 Telemarketing Rules 475 Do Not Call List Exemptions 476 The Penny Stock Cold Call Rule 476 The Role of the Principal 477 Violations and Complaints 477 Resolution of Allegations 477 Minor Rule Violation 478 Code of Arbitration 478 The Arbitration Process 479

23 Contents xxi Mediation 480 Currency Transactions 481 The Patriot Act 481 U.S. Accounts 483 Foreign Accounts 483 Annual Compliance Review 483 Business Continuity Plan 483 Sarbanes-Oxley Act 484 The Uniform Securities Act 485 Tender Offers 486 Stockholders Owning 5% of an Issuer s Equity Securities 487 Pretest 489 ANSWER KEYS 495 GLOSSARY OF EXAM TERMS 513 INDEX 579

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25 About the Series 7 Exam Congratulations! You are on your way to becoming a registered representative licensed to conduct business in all general securities. The Series 7 exam will be presented in a 250-question, multiple-choice format. The test will be divided into two three-hour sessions. Each candidate will have a total of six hours in which to complete the exam. A score of 72 percent or higher is required to pass. Once the first three-hour 125-question session is completed, the candidate must take at least a 30-minute break and will not have the opportunity to go back and review the questions from the first session. The Series 7 is as much a knowledge test as it is a reading test. The writers and instructors at The Securities Institute have developed the Series 7 textbook, exam prep software, and videos to ensure that you have the knowledge required to pass the test and to make sure that you are confident in the application of the knowledge during the exam. IMPORTANT EXAM NOTE The Series 7 exam may use the term specialist, designated market maker (DMM), or both to describe a member of the NYSE responsible for maintaining a fair and orderly market in a security. Test-takers are advised to be aware of this and to treat the two terms as interchangeable.

26 xxiv WILEY SERIES 7 Exam Review 2016 TAKING THE SERIES 7 EXAM The Series 7 exam is presented in multiple-choice format on a touch screen computer known as the PROCTOR system. No computer skills are required, and candidates will find that the test screen works in the same way as an ordinary ATM machine. Each test is made up of 250 questions that are randomly chosen from a test bank of thousands of questions. Each Series 7 exam will have several practice questions that do not count towards the final score. The test has a time limit of six hours and is designed to provide enough time for all candidates to complete the exam. Each Series 7 exam contains questions that focus on five critical job functions performed by Series 7 registered representatives. In order to successfully complete the Series 7 exam, you will need a full understanding of the activities and knowledge required to perform these job functions as well as a complete understanding of the rules that regulate these job functions. The Series 7 exam will be made up of questions from the following areas: Seeks business for the broker-dealer through 68 questions 27% customers and potential customers Evaluates customers other security holdings, 27 questions 11% financial situation and needs, financial status, tax status, and investment objectives Opens accounts, transfers assets, and 27 questions 11% maintains appropriate account records Provides customers with information 70 questions 28% on investments and makes suitable recommendations Obtains and verifies customer s purchase and 58 questions 23% sales instructions, enters orders, and follows up TOTAL 250 Questions 100% HOW TO PREPARE FOR THE SERIES 7 EXAM For most candidates, the combination of reading the textbook, watching the videos, and using the exam prep software is enough to successfully complete the exam. It is recommended that candidates spend at least 60 hours preparing for the exam by reading the textbook, underlining key points, watching

27 About the Series 7 Exam xxv the video class, and completing as many practice questions as possible. We recommend that candidates schedule their exam no more than one week after completing their Series 7 exam prep. Test-Taking Tips Read the full question. Identify what the question is asking. Identify key words and phrases. Watch out for hedge clauses, for example, except and not. Eliminate wrong answers. Identify synonymous terms. Be wary of changing answers. WHAT TYPE OF BUSINESS MAY BE CONDUCTED BY SERIES 7 REGISTERED REPRESENTATIVES? A Series 7 registered representative may conduct business in all general securities products, including: Stocks, bonds, options, and rights. Exchange-traded funds (ETFs). Exchange-traded notes (ETNs). Warrants. American depositary receipts (ADRs). Mutual funds. Investment company products, direct participation programs (DPPs), real estate investment trusts (REITs), U.S. government securities, and municipal securities. Collateralized mortgage obligations (CMOs). WHAT SCORE IS NEEDED TO PASS THE EXAM? A score of 72 percent or higher is needed to pass the Series 7 exam.

28 xxvi WILEY SERIES 7 Exam Review 2016 ARE THERE ANY PREREQUISITES FOR THE SERIES 7? There are no prerequisites for the Series 7 exam. A candidate is not required to have any other professional qualifications prior to taking the Series 7 exam. HOW DO I SCHEDULE AN EXAM? Ask your firm s principal to schedule the exam for you or to provide a list of test centers in your area. You must be sponsored by an FINRA member firm prior to making an appointment. The Series 7 exam may be taken any day that the exam center is open. WHAT MUST I TAKE TO THE EXAM CENTER? You should only take a picture ID with you. Everything else will be provided, including a calculator and scratch paper. HOW LONG WILL IT TAKE TO GET THE RESULTS OF THE EXAM? The exam will be graded as soon as you finish your final question and hit the Submit for Grading button. It will take only a few minutes to get your results. Your grade will appear on the computer screen, and you will be given a paper copy from the exam center. If you do not pass the test, you will need to wait 30 days before taking it again. If you do not pass on the second try, you will need to wait another 30 days. If you fail the test again, you are required to wait 6 months to take the test again.

29 About This Book The writers and instructors at The Securities Institute have developed the Series 7 textbook, exam prep software, and videos to ensure that you have the knowledge required to pass the test and to make sure that you are confident in the application of the knowledge during the exam. The writers and instructors at The Securities Institute are subject-matter experts as well as a Series 7 test experts. We understand how the test is written, and our proven test-taking techniques can dramatically improve your results. Each chapter includes notes, tips, examples, and case studies with key information; hints for taking the exam; and additional insight into the topics. Each chapter ends with a practice test to ensure that you have mastered the concepts presented before moving on to the next topic.

30 About the Test Bank This book is accompanied by a test bank of more than 500 questions to further reinforce the concepts and information presented here. The access card in the back of this book includes the URL and PIN code you can use to access the test bank. This test bank provides a small sample of the questions and features that are contained in the full version of the Series 7 exam prep software. If you have not purchased the full version of the exam prep software with this book, we highly recommend it to ensure that you have mastered the knowledge required for your Series 7 exam. To purchase the exam prep software for this exam, visit The Securities Institute of America online at or call