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ModuleS7

Series 7: General Securities Representative Top-Off Exam

Prepare for Series 7: General Securities Representative Top-Off Exam with practice questions covering 18 topics. Build your knowledge, track your progress, and study effectively with GoFINRA.

Questions
2,627
Units
4
Topics
18

What’s in it.

4 units

Sample questions

3 of many

A few questions from this module, with the answer and a full explanation. The complete bank is available when you start practising.

  1. What must a firm do if a customer's account statement is returned as undeliverable by the post office?

    • The firm need take no action if the account has been inactive for over 12 months
    • The firm must take prompt steps to locate the customer's current address, attempt re-delivery, and apply heightened supervision to the account until contact is reestablished
      Correct answer
    • The firm must suspend all trading in the account immediately until the customer's address is updated
    • The firm must notify FINRA within 10 business days of the returned mail
    Explanation

    When an account statement or other required communication is returned as undeliverable, the firm must make reasonable efforts to locate the customer's current address. This typically includes checking public records, contacting the customer by phone, and reviewing any other correspondence in the file. Returned mail is a red flag for fraud — it may indicate that an unauthorized party has changed the address of record to divert account statements and hide fraudulent activity. The firm should also review the account for any recent address changes or unusual activity and apply heightened supervision until contact with the customer is reestablished.

  2. Is participation in FINRA mediation mandatory or voluntary for both parties?

    • Mediation is mandatory for the firm but voluntary for the customer
    • Mediation is mandatory when the parties have signed a pre-dispute arbitration agreement
    • FINRA mediation is entirely voluntary — either party may decline to participate or withdraw at any time
      Correct answer
    • Mediation is mandatory for claims under $100,000 before FINRA arbitration may be initiated
    Explanation

    FINRA mediation is entirely voluntary. Neither party can be compelled to mediate, and either party may withdraw at any point during the process without penalty. This is a key distinction from arbitration, which is mandatory for industry disputes and mandatory for customers who have signed pre-dispute arbitration agreements. FINRA mediation is a separate, voluntary dispute resolution option.

  3. A customer purchases $200,000 of marginable equity securities. Under Regulation T, what is the required margin deposit, what is the debit balance (loan from the broker-dealer), and how much equity does the customer have initially?

    • Required deposit: $60,000 (30%); debit balance: $140,000; initial equity: $60,000
    • Required deposit: $100,000 (50%); debit balance: $100,000; initial equity: $200,000 (full market value)
    • Required deposit: $100,000 (50%); debit balance: $100,000 (50% loan); initial equity: $100,000 (50% of market value)
      Correct answer
    • Required deposit: $200,000 (100%); debit balance: $0; equity: $200,000 (no margin used)
    Explanation

    Under Regulation T, the initial margin requirement is 50%. For a $200,000 purchase: the customer must deposit $100,000 (50%), the broker lends the remaining $100,000 (the debit balance), and initial equity equals market value minus the debit balance ($200,000 - $100,000 = $100,000, which is 50% of market value).