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630 multiple-choice questions, 510 flashcards and 30 scenario simulations, organised into 9 chapters, written to the FINRA Series 7 Content Outline. Every question carries a full rationale.
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FINRA Series 7 Content Outline — 4 Major Job Functions; topics organized as Equity & Debt Products, Options, Investment Companies & Retirement, Customer Accounts/Trading/Regulatory
CoStudy's Series 7 (FINRA) bank holds 1,170 items organised into 9 chapters that follow the published blueprint. Every multiple-choice question carries a written rationale explaining why the correct answer is correct and why each distractor is tempting but wrong, and the bank includes 30 scenario-based simulations.
Each chapter follows a domain of the published exam outline. Practise one on its own:
A sample of 24 multiple-choice questions from the bank, with the full rationale shown.
A rep sends a form letter promoting an equity fund to 30 retail clients. Under Rule 2210 this is:
Answer: A — Retail communication requiring principal approval
A) Correct — content sent to more than 25 retail persons in 30 days is retail communication. B) Retail investors don't fit institutional definition. C) Above 25 retail investors becomes retail communication. D) Public appearance is a different category.
Which of the following would MOST likely violate FINRA's standards for retail communications?
Answer: B — A statement guaranteeing a minimum annual return on a variable investment
B) Correct — guaranteeing returns on a variable, market-dependent product is misleading and prohibited. A) A truthful, methodology-disclosed comparison is permitted. C) Balanced risk/benefit disclosure is required, not a violation. D) Linking to the prospectus is a compliant practice.
Before a public offering's effective date, an underwriter may distribute:
Answer: C — Tombstone ads and a preliminary (red herring) prospectus
A) Final prospectus is only after effectiveness. B) That's a private placement, not a public offering. C) Correct — tombstone ads and preliminary prospectus permitted in cooling-off period. D) Research is restricted in the quiet period.
Within 15 days of options account approval, the firm must:
Answer: C — Obtain a signed options account agreement from customer
A) Exercise instructions are per-trade, not a signed form. B) SEC does not send confirmation letters. C) Correct — the signed options agreement is required within 15 days of approval. D) Form 8949 is annual tax reporting.
When an UTMA minor reaches age of majority in the state:
Answer: A — Assets transfer to the now-adult beneficiary fully
A) Correct — beneficiary takes full ownership and control at majority. B) Custodian's role ends at majority. C) UTMA assets are the beneficiary's. D) No default lock exists to age 30.
A corporate brokerage account requires a signed:
Answer: C — Formal corporate resolution
A) Verbal alone is insufficient. B) Personal guarantee not required. C) Correct — resolution authorizes trading. D) Trust indenture is unrelated.
Regulation M restricts trading activities during a:
Answer: A — Distribution or offering
A) Correct — Reg M covers distributions. B) Earnings quiet period is separate. C) Fund redemptions are separate. D) Call schedules are unrelated.
Customer owns 100 XYZ at $40 cost. XYZ declares a 25% stock dividend. Post-dividend position:
Answer: A — 125 shares at $32 cost basis
A) Correct — 100 x 1.25 = 125 shares; $4,000 total cost / 125 = $32 per share. B) Share count must increase after a stock dividend. C) Per-share basis must decrease when shares increase. D) 25% dividend gives 125 shares, not 150.
A firm-commitment underwriting means the underwriter:
Answer: D — Buys the entire offering
A) That describes best efforts. B) Marketing-only is best efforts. C) Bidding is competitive process. D) Correct — underwriter takes inventory risk.
$1,000 par bond, 6% coupon, trading at 95. Current yield equals:
Answer: C — 6.32% (60 / 950) — discount bond formula
A) That's a premium bond formula. B) Coupon rate isn't current yield when price ≠ par. C) Correct — CY = $60 / $950 ≈ 6.32%. D) Uses wrong coupon and price.
TIPS protect against inflation primarily by:
Answer: D — Adjusting principal by CPI then applying fixed coupon
A) Coupon rate on TIPS is fixed, not adjusted. B) TIPS provide a real return but no guarantee above CPI. C) TIPS have no early-redemption feature at CPI. D) Correct — principal is indexed to CPI; the fixed coupon rate applies to the adjusted principal.
Effective May 2024, regular-way settlement for U.S. equities and corporate bonds is:
Answer: B — T+1 (one business day settlement current)
A) T+0 is only by agreement for cash trades. B) Correct — T+1 became the standard in May 2024. C) T+2 was the standard 2017–2024. D) T+3 was the standard before 2017.
Interest on which of the following bonds is generally exempt from federal income tax?
Answer: D — State GO municipal bond
A) Corporate interest is federally taxable. B) Treasury interest is federally taxable (state-exempt). C) Convertibles are corporate debt and federally taxable. D) Correct — municipal bond interest is federally tax-exempt.
Interest on a private-activity municipal bond is generally:
Answer: D — Subject to federal AMT for many private-activity issues
A) Certain private-activity issues lose federal exemption via AMT. B) Standard federal exemption applies outside AMT. C) State exemption depends on residency. D) Correct — many private-activity bonds create AMT preference income.
An industrial revenue bond (IDR) is typically backed by:
Answer: B — The corporate lessee credit
A) State fund does not back IDRs. B) Correct — corporate lessee's credit. C) Federal grants are not the backing. D) LOCs may enhance but not back.
A long straddle profits when the underlying:
Answer: C — Moves sharply in either direction
A) Range-bound loses both premiums. B) Tight range is unprofitable. C) Correct — needs a large move up or down. D) Dividends do not drive it.
A long call gains value when the underlying's price:
Answer: A — Rises above the strike
A) Correct — ITM increases intrinsic value. B) Falling hurts a long call. C) At the strike, intrinsic is zero. D) Zero is the worst case.
A protective put strategy consists of:
Answer: D — Long stock plus long put at same strike
A) That is a covered call. B) That is a synthetic long call construction, not protective put. C) A short put adds risk rather than hedging. D) Correct — long stock plus long put creates a floor on downside.
REIT dividends are generally taxed to the shareholder as:
Answer: D — Ordinary taxable income
A) Most REIT payouts are not qualified. B) LTCG treatment is limited. C) REIT dividends are not tax-free. D) Correct — taxed as ordinary income.
Class A mutual fund shares typically feature:
Answer: B — Front-end load and lower ongoing 12b-1 fees
A) That describes true no-load funds. B) Correct — Class A shares carry a front-end sales charge with lower 12b-1. C) That describes Class B shares. D) Class C typically carries the highest 12b-1.
A customer opening a margin account must receive a:
Answer: A — Margin disclosure statement under Rule 2264
A) Correct — Rule 2264 requires a margin disclosure statement plus signed margin/credit agreement. B) Margin does carry risk. C) No guarantees are provided. D) No refund entitlement exists.
To let a relative trade a customer's account, the firm must first obtain a:
Answer: A — Written trading authorization
A) Correct — written third-party authority required. B) Verbal permission is insufficient. C) JT covers ownership, not trading. D) Margin covers borrowing, not authority.
Regulation T sets the initial margin requirement for a new margin securities purchase at:
Answer: B — 50%
B) Correct — Reg T's standard initial margin requirement is 50%. A) 25% is closer to the FINRA maintenance margin level, not the Reg T initial requirement. C) 75% overstates the current Reg T requirement. D) 100% would mean no margin loan at all, which isn't the Reg T standard.
A trade confirmation sent to a customer must disclose all of the following EXCEPT:
Answer: C — The customer's account balance in all of their other accounts
C) Correct — a confirmation covers the specific trade, not the customer's unrelated account balances. A) Trade and settlement dates are required. B) Capacity (agent or principal) is required. D) Price and quantity are core required disclosures.
6 sample cards from the 510 in the bank.
What is the difference between a net revenue pledge and a gross revenue pledge?
Gross pledge: bondholders are paid from gross revenues before operating expenses. Net pledge: bondholders are paid from net revenues after operating expenses. Gross is more secure for bondholders.
A margin account has a long market value of $80,000 and equity of $35,000. What is the equity percentage?
43.75%. Equity % = Equity / Market Value = $35,000 / $80,000 = 43.75%. Above 25% maintenance requirement.
A muni bond yields 4%. An investor is in the 32% bracket. What is the taxable equivalent yield?
5.88%. TEY = Tax-free yield / (1 − Tax rate) = 4% / 0.68 = 5.88%.
An investor inherits stock from a deceased parent. The original cost was $20; the market value at death was $80. What is the cost basis?
$80 (stepped-up basis). When the investor sells, capital gain/loss is calculated from $80, eliminating all unrealized gain at death.
What is the ex-dividend date?
The first date a buyer will NOT receive the upcoming declared dividend. Typically one business day before the record date.
What is the bid and ask (offer)?
Bid: the highest price a buyer will pay. Ask: the lowest price a seller will accept. The difference is the spread — the market maker's profit.
These samples are a small slice. The full bank runs flashcards, multiple choice and timed mock exams with per-chapter progress tracking, on the web and in the iOS app.
The Series 7 (FINRA) bank holds 1,170 items: 630 multiple-choice questions, 510 flashcards and 30 scenario-based simulations. 30 of them are on this page to read free, with no signup.
Yes. Every multiple-choice item carries a written rationale that states the controlling principle behind the correct answer and then addresses each wrong option in turn — why it tempts and precisely where it fails. Knowing why the plausible answer was wrong is worth more than knowing which letter was right.
It is organised into 9 chapters that follow the published exam blueprint: Seeks Business for the Broker-Dealer from Customers and Potential Customers; Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives; Equity Securities; Debt Securities; Municipal Securities; Options; Packaged Products (Mutual Funds, Annuities, UITs, ETFs); Retirement Plans and Suitability; Obtains and Verifies Customer Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions. The number of questions in each chapter is proportional to that domain's published weight, so working through the bank exposes you to roughly the mix the real exam uses.
FINRA Series 7 Content Outline — 4 Major Job Functions; topics organized as Equity & Debt Products, Options, Investment Companies & Retirement, Customer Accounts/Trading/Regulatory
The samples on this page are free to read in full, rationales included, with no account. The complete 1,170-item bank, the timed mock exams and per-chapter progress tracking are part of CoStudy on the web and in the iOS app.
Last reviewed 2026-08-22. Banks are written against the certifying body's published exam outline and re-checked when that outline changes — exams get renumbered, retired and reweighted, and a bank written to a superseded outline teaches the wrong proportions. Figures that are re-indexed annually are deliberately not asserted as rules; the questions test the governing principle instead.
This bank is written against FINRA's published exam material. Check the FINRA exam content outlines for the current outline, fees and eligibility rules — those change, and the certifying body is the only authority on them. CoStudy is not affiliated with FINRA.