The Series 7 exam typically takes six hours to complete. The test is taken on a computer in a monitored location. Ten of the 260 questions do not count toward your grade. These questions are being evaluated for use on future tests. You do not know which of the 260 questions do not count. After you complete the test, you receive your score within a few seconds on your computer screen. When you leave the testing area, you receive a profile from the person who monitors the test, showing how you did in each section of the test. You do not see how you did on each individual question.
There are several areas emphasized on the Series 7. One of these is the need to provide your customer with information on various investments, and to follow up with appropriate advice. This category makes up 123 of the 250 actual questions on the test. Under this category, one component is the "Know your Customer" rules. These rules basically stipulate that you cannot give advice to a customer without knowing his needs (is he saving for college, or has he already retired and needs current income), as well as information about his current financial situation and his tolerance for risk.
You must also learn about a myriad of investment opportunities, such as stocks, mutual funds and preferred stocks. Options is one of the more complicated areas of study. Under the options umbrella, you may be tested on puts (an option you buy when you think the stock is going down), calls (options you buy when you think the stock will rise), spreads and combinations, which are various combinations of calls and puts designed to either lock in a profit or minimize a loss.
Bonds are another aspect of the Series 7 that you need to master in order to pass the exam. Bonds can include corporate bonds, which are offered by a business to raise capital. These bonds represent a debt owed by the company to you. Bonds do not represent ownership in the company like stock does. There are also several forms of municipal bonds. These securities are used by local governments to fund local projects. You also need to know how these types of bonds are treated tax-wise.