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Cheat Sheet

Series 7 Exam For Dummies

Taking the Series 7 exam, whether for the first time or the fourteenth, is a huge challenge and requires many hours of preparation. Put your time to good use by taking a look at the following articles so you can be ready before the exam even begins and you can be successful once it’s completed.

Establishing a Strong Study Routine for the Series 7 Exam

Passing the Series 7 exam is a rite of passage for stockbrokers. If you put the time and effort into studying for the exam, you'll be rewarded. If not, you'll have to take it over and over again until you pass. You have to use your time efficiently, and to accomplish this, you need to grab every spare moment and channel it into study time. Follow the tips listed here and you'll be well on your way to earning a passing grade.

  • Get into a consistent study routine on a daily basis; never separate yourself from your textbooks for more than one day.

  • Stay focused. If you get stuck on a multipart question, break down the question into segments; if you run into trouble with a math question, draw diagrams.

  • Take short, ten-minute breaks throughout the day to give your brain a chance to process information.

  • Reinforce your knowledge every day by reviewing old information while learning new material.

  • Make yourself some flash cards to use as study aids.

  • Record your notes onto a tape recorder and play them back at night while you're falling asleep.

  • Take several practice exams before you tackle the real deal. You should consistently score 80 to 85 percent on the sample tests to ensure that you're ready.

Tackling Series 7 Exam Questions

To be successful on the Series 7 exam, you have to master the concepts that form the basis of the questions and, equally importantly, you need to develop your test-taking skills. Examining the different types of questions on the exam and how to answer them is a smart way to achieve your goal of passing the Series 7.

  • Read the question carefully.

  • Underline or highlight key words to avoid tricky detractors (except, unless, not).

  • Identify the facts you need to answer the question and ignore the information you don’t need.

  • Use scrap paper to write down formulas and key points from the question, perform calculations, and draw diagrams.

  • When you’re unsure of the correct answer, eliminate as many wrong answers as possible.

  • Work with the facts presented in the question and don’t make the question more difficult than it is.

  • If you don’t know the answer, don’t obsess. Take your best guess and mark it for review to return to later. As you go through the exam, another question may trigger your memory. If you still aren’t sure of the answer when you return, remember these tips:

    • Select a more precise answer more often than a less precise answer.

    • Select a longer answer over a shorter answer.

    • When answering multiple choice questions, if you see two opposing answer choices, one must be right.

    • Cannot be determined is almost never the correct answer on the Series 7 exam.

    • In complex (two-tiered) questions, an answer choice of none of the above is almost always wrong; you can usually eliminate it.

  • Keep track of time.

Memorizing Important Formulas for the Series 7 Exam

You can’t bring your notes into the Series 7 exam center, so be sure to stow the following info away in your brain and write it on the scrap paper provided after the test begins:

Determine the outstanding shares

Outstanding shares = issued shares – treasury stock

Long margin account formula

Long market value (LMV) – debit record (DR) = equity (EQ)

Short margin account formula

Short market value (SMV) + equity (EQ) = credit record (CR)

Calculate the time value of an option

Premium (P) = intrinsic value (I) + time value (T)

Balance sheet formula

Assets = liabilities + stockholder’s equity

Calculate working capital

Working capital = current assets – current liabilities

Calculate the time value of an option

Premium (P) = intrinsic value (I) + time value (T)

What to Do the Day before You Take the Series 7 Exam

You’ve studied for the Series 7 exam, you know the content backward and forward. You are ready! So, don’t let your nerves overtake you the day of the exam. Follow these steps to ready yourself for test-taking day and you’ll be prepared to walk in and conquer the Series 7:

  • Review your notes until noon.

  • Get away from the books: Go out to dinner (skip the spicy foods and alcohol) or go to a movie — do whatever you want to rest your mind.

  • Gather the items to bring with you to the exam site:

    • Your ID

    • Exam site directions

    • Layered clothing

    • Earplugs (if allowed)

    • A clock or watch

    • A snack/lunch

    • Your cellphone for emergencies (leave it in
      the car)

    • Study material and notes (leave them in the car)

  • Set two alarm clocks. Leave enough time to get to the exam site an hour and a half early — one hour for more review and one half-hour for checking in.

  • Get to bed early.

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