The
NASD Series 7 and
Series 63 are the licensing tests that you must pass in order to become a
stockbroker. However, before you're allowed to sit for the
exams, you must first obtain
sponsorship or
employment from a NASD or
exchange member
firm. You must also submit a set of
fingerprints and undergo a
background check.
The Series 7 is a 6 hour, 250
multiple choice question exam taken in 2 3-hour sittings. There are actually 260 questions, but only 250 count towards your score, as the other 10 are
experimental questions.
The exam covers the 6 following sections:
Advertising, Qualifying Customers, Industry Regulations
Securities Instruments
Handling Customer Accounts, Taxation, Margin
Securities Markets, Order Handling, Confirmations
Economics, Securities Analysis, Sources of Financial Information
Portfolio Analysis, Investment Strategies, Retirement Plans
A score of 70% is passing, and there is no penalty for
guessing.
Sample Question:
Which of the following option
positions would represent the most
risk to a customer?
a. Net
debit spread
b. Net credit spread
c.
Long call
d. Short
straddle
D. The short straddle is a short call combined with a short put on the same underlying. This has the most risk because it has unlimited loss potential, i.e. if the underlying increases significantly, you must pay on margin.