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Cheat sheet

Series 7 Cheat Sheet

Practice this exam

Business Development

  • 7% of exam
  • Communications New Issues Prospecting Approvals

Account Opening

  • 9% of exam
  • CIP KYC Customer Profile Account Picker

Recommendations

  • 73% of exam
  • Products Suitability Options Munis Product Picker

Transactions

  • 11% of exam
  • Orders Settlement Margin Order Picker

Quick Facts

  • Questions 125 scored
  • Total items 130 total
  • Time 3h 45m
  • Pass 72 scaled
  • Sponsor FINRA firm
  • Corequisite SIE
  • Fee $395
  • Format Multiple choice

IPO vs Reg D BU

IPO

  • Registered offering
  • Public sale
  • Prospectus required

Reg D

  • Private placement
  • Accredited investors
  • Restricted resale
  • Public vs private

Communications BU

  • Retail Over 25 retail in 30 days
  • Institutional Institutions only
  • Correspondence One or few
  • Principal approval Before retail use
  • Research report Quiet periods matter
  • Options ODD At or before approval
  • CMO ad Special risk disclosure

New Issues BU

  • IPO Initial public offering
  • Red herring Preliminary prospectus
  • Final prospectus Post-effective disclosure
  • Cooling-off No sales
  • Syndicate Underwriting group
  • Selling group Sells, no risk
  • Reg D Private placement
  • QIB Rule 144A buyer

Recommendation Order AC

  • Facts first, recommendation second
  • KYC first Profile matters Reg BI applies

KYC vs Suitability AC

KYC

  • Collect facts
  • Know customer
  • Account basis

Suitability

  • Use facts
  • Match recommendation
  • Product fit
  • Facts vs fit

Account Picker AC

  • Customer is minor → Custodial ( UGMA/UTMA )
  • Multiple owners → Joint ( Survivorship varies )
  • Borrowing requested → Margin ( Agreement required )
  • Firm picks security or amount → Discretionary ( Written authority )
  • Entity opens account → Corporate ( Resolution required )
  • Beneficiary transfer → TOD ( Avoid probate )

Account Docs AC

  • CIP Verify identity
  • KYC Essential facts
  • Reg S-P Privacy notices
  • POA Trading authority
  • Discretionary Written authorization
  • Trusted contact Senior protection
  • Corporate resolution Entity authority
  • Options agreement Within 15 days of approval

Customer Profile AC

  • Objective Income/growth/speculation
  • Liquidity Cash need
  • Time horizon Investment period
  • Tax status Tax impact
  • Risk tolerance Loss comfort
  • Net worth Assets minus liabilities
  • Experience Product familiarity
  • Hold advice Reg BI covered

Function Weights RE

  • 7 | 9 | 73 | 11
  • Business 7 Accounts 9 Recommendations 73 Transactions 11

GO vs Revenue RE

GO

  • Tax backing
  • Voter approval
  • Debt limit

Revenue

  • Project revenue
  • Feasibility matters
  • Rate covenant
  • Taxes vs project

Product Picker RE

  • Need voting upside → Common stock ( Equity )
  • Need fixed dividend → Preferred ( Hybrid )
  • Need interest income → Bond ( Debt )
  • Need tax-free income → Municipal ( Tax )
  • Need daily pooled pricing → Mutual fund ( NAV )
  • Need intraday basket → ETF ( Exchange )
  • Need insurance wrapper → Variable annuity ( Separate account )
  • Need options hedge → Protective put ( Hedge )

Equities RE

  • Common Voting ownership
  • Preferred Fixed dividend
  • ADR Foreign shares
  • Rights Short-term subscription
  • Warrants Long-term purchase
  • REIT Real estate pool
  • Penny stock High disclosure risk

Options Direction RE

  • Call up | put down
  • Call buys Put sells Buyer has right Seller has obligation

Mutual Fund vs ETF RE

Mutual fund

  • Forward NAV
  • Redeemable shares
  • Prospectus sale

ETF

  • Intraday price
  • Exchange traded
  • Brokerage commissions
  • NAV vs market

Option Strategy RE

  • Bullish stock substitute → Long call ( Limited risk )
  • Bearish stock substitute → Long put ( Limited risk )
  • Own stock; seek income → Covered call ( Upside capped )
  • Own stock; seek hedge → Protective put ( Floor created )
  • Expect volatility → Long straddle ( Two premiums )
  • Expect stability → Short straddle ( Unlimited risk )

Debt RE

  • Par $1,000 face
  • Coupon Stated interest
  • Current yield Income / price
  • YTM Total bond return
  • YTC Call-date return
  • Discount Below par
  • Premium Above par
  • Duration Rate sensitivity
  • Accrued interest Buyer pays seller

Bond Rates RE

  • Rates up | prices down
  • Inverse relationship Coupon fixed Yield adjusts Long duration hurts

Call vs Put RE

Call

  • Buy stock
  • Bullish buyer
  • Upside leverage

Put

  • Sell stock
  • Bearish buyer
  • Downside hedge
  • Buy vs sell

Muni Yield Picker RE

  • Compare taxable yield → TEY ( Divide by complement )
  • Bought premium muni → Amortize premium ( Basis down )
  • Bought discount muni → Accrete discount ( Basis up )
  • Need disclosure → Official statement ( Muni primary )

Munis RE

  • GO Tax-backed debt
  • Revenue Project-backed debt
  • BAN Bond anticipation note
  • TAN Tax anticipation note
  • TEY Tax-free comparison
  • AMT Preference item risk
  • Official statement Muni disclosure
  • EMMA Muni market data

Muni Backing RE

  • GO taxes | revenue project cash
  • GO tax pledge Revenue user fees TEY for brackets

Funds RE

  • Mutual fund Forward NAV
  • ETF Intraday trading
  • Closed-end Market price
  • UIT Fixed portfolio
  • 12b-1 Distribution fee
  • Breakpoint Sales charge discount
  • LOI Future breakpoint intent
  • ROA Household aggregation

Options RE

  • Call Right to buy
  • Put Right to sell
  • Long option Pays premium
  • Short option Obligation assumed
  • Covered call Stock plus short call
  • Protective put Stock plus long put
  • Spread Long and short
  • Straddle Same strike

Variable Products RE

  • Variable annuity Separate account
  • Fixed annuity General account
  • Accumulation unit Pay-in measure
  • Annuitization Payout conversion
  • Death benefit Beneficiary floor
  • Subaccount Investment option
  • 1035 exchange Tax-free insurance swap

Alternatives RE

  • DPP Pass-through income
  • Limited partner Passive investor
  • General partner Manages partnership
  • Hedge fund Limited liquidity
  • Private placement Registration exempt
  • Reg A Mini public offering
  • CMO Prepayment risk

Suitability + Reg BI RE

  • Reasonable basis Product suitable generally
  • Customer specific Fits profile
  • Quantitative No excessive trading
  • Best interest No customer harm
  • Disclosure Material facts
  • Care Diligent recommendation
  • Conflict Mitigate or disclose
  • Documentation Record recommendation

Tax + Risk RE

  • Capital gain Sale profit
  • Ordinary income Interest income
  • Qualified dividend Preferential rate
  • TEY Muni comparison
  • Reinvestment risk Lower future rates
  • Call risk Early redemption
  • Credit risk Issuer default
  • Inflation risk Purchasing power loss

Margin Sides TR

  • Long debit | short credit
  • LMV minus debit Credit minus SMV SMA equals excess

Broker vs Dealer TR

Broker

  • Agent
  • Matches trades
  • Charges commission

Dealer

  • Principal
  • Own inventory
  • Earns spread
  • Agent vs principal

Order Picker TR

  • Need immediate fill → Market ( Price uncertain )
  • Set maximum buy → Buy limit ( At or lower )
  • Set minimum sell → Sell limit ( At or higher )
  • Protect long stock → Sell stop ( Below market )
  • Protect short stock → Buy stop ( Above market )
  • Control stop price → Stop limit ( Execution uncertain )

Orders TR

  • Market order Execution priority
  • Limit order Price control
  • Stop order Trigger market
  • Stop limit Trigger limit
  • Not held Broker discretion
  • DNR Do not reduce
  • Solicited Rep recommended
  • Unsolicited Customer initiated
  • Principal trade Firm inventory
  • Agency trade Commission trade

Market vs Limit TR

Market

  • Execution likely
  • Price uncertain
  • Speed priority

Limit

  • Price controlled
  • Execution uncertain
  • Or better
  • Speed vs price

Settlement + Records TR

  • T+1 Regular settlement
  • Confirmation Trade details
  • TRACE Bond reporting
  • RTRS Muni reporting
  • DK Comparison dispute
  • DVP/RVP Institutional settlement
  • Complaint Written grievance
  • U4 update Reportable changes

Stop vs Stop Limit TR

Stop

  • Trigger market
  • Fill likely
  • Price uncertain

Stop limit

  • Trigger limit
  • Price controlled
  • May miss
  • Protection vs certainty

Margin TR

  • Reg T 50% initial
  • LMV Long market value
  • SMV Short market value
  • Debit Customer loan
  • Credit Short account balance
  • SMA Excess equity
  • Maintenance Ongoing minimum
  • Margin call Deposit required
  • Hypothecation Pledge customer securities

Reg T vs Maintenance TR

Reg T

  • Initial purchase
  • 50% equity
  • Federal Reserve

Maintenance

  • Ongoing minimum
  • Exchange/firm rules
  • Triggers call
  • Initial vs ongoing

Conduct TR

  • Insider trading MNPI misuse
  • Churning Excessive trading
  • Front running Trade ahead
  • Selling away Unapproved securities
  • OBA Written notice
  • Gifts $300 yearly limit
  • AML Detect suspicious activity
  • SAR $5,000 suspicious activity
  • CTR Over $10,000 cash
  • SIPC Broker failure coverage

Common Traps

Item Count

  • 125 scored ≠ 130 total

Corequisite

  • SIE required ≠ Sponsor still required

Muni Scope

  • Sales allowed ≠ Underwriting needs Series 52

Order Certainty

  • Market fills ≠ Limit may miss

Stop Trap

  • Stop becomes market ≠ Stop-limit may miss

Fund Pricing

  • Mutual fund forward NAV ≠ ETF market price

Bond Math

  • Rates rise ≠ Prices fall

Margin Timing

  • Reg T initial ≠ Maintenance ongoing

SIPC

  • Broker failure ≠ Not market loss

Discretion

  • Time/price okay ≠ Action needs authority

Last Minute

  • 1. F3 drives 73%
  • 2. 125 scored; 130 total
  • 3. Pass mark is a scaled 72
  • 4. SIE plus sponsor required
  • 5. No reference materials allowed
  • 6. Business 7; accounts 9
  • 7. Transactions 11%
  • 8. Recommendations dominate exam
  • 9. Rates up; bond prices down
  • 10. Call buys; put sells
  • 11. Market fills; limit controls price
  • 12. GO taxes; revenue project cash
  • 13. Mutual funds forward-price NAV
  • 14. SIPC protects custody, not loss
  • 15. Discretion needs written authority