How to Prepare for the Series 7 License

One must have a series 7 license in order to work as a stock broker in the United States.

The Series 7, or General Securities Representative exam is required in order to obtain a general securities license needed to be a broker in the United States. The exam consists of 260 questions related to stocks, bonds, options, limited partnerships and products from investment companies. A potential broker must answer 70 percent of the questions correctly in order to pass the exam and obtain a license.

Things You'll Need

• Series 7 study guide

Instructions

1. Understand the format of the test. The test contains 250 multiple choice questions in 7 different categories. According to Investopedia, an online information website for investors, the key areas include prospecting for and qualifying customers, evaluating customer needs and objectives and providing customers with investment information and making suitable recommendations. Test-takers must also understand how a broker handles customer accounts and account records, understand and explain securities markets organization and participants to customers. Other areas for the test include understanding the processing of customer orders and transactions, monitoring economic and financial events, performing customer portfolio analysis and making suitable recommendations.

2. Learn the basic details of the test categories, which include equity and debt securities, markets and regulations, options and derivatives, retirement plans, investment companies and taxation. A good place to start research on this is through books at the local library, online resources such as Freddie Mac and money magazines.

3. Obtain a study guide with series 7 exam sample questions. Review the questions and take practice exams to gauge progress and understanding of the content. If you find that you regularly score low in a specific area, focus on building knowledge of that specific topic.

4. Review practice exams and retake until fairly comfortable with the material. It is important to get a complete grasp on the questions you might be asked.

Tips & Warnings

• Avoid trying to cram for the test days beforehand. It is best to study a few hours a day for several months leading up to the exam. Taking several practice exams ahead of time will also help you gauge your abilities and react within enough time to address any areas of weakness.

References

• FINRA: Registration and Examination Requirements
• Investopedia: Exam Prep--Series 7 Exam

Resources

• Amazon: Series 7 Study Guides