Series 7 Exam For Dummies

Steven M. Rice is a partner in Empire Stockbroker Training Institute, one of the country’s leading schools for training to the security industry. He is also an instructor at Empire and is the author of Series 7 Exam For Dummies.

Introduction 1

What You’ll Find 1

Beyond the Book 2

Where to Go for Additional Help 2

Part I: The Questions 3

Chapter 1: Underwriting Securities 5

The Problems You’ll Work On 5

What to Watch Out For 5

1–34 Bringing New Issues to Market 6

35–44 Distribution of Profits 11

45–49 Types of Offerings 12

50–64 Exempt Securities and Transactions 13

Chapter 2: Equit y Securities 17

The Problems You’ll Work On 17

What to Watch Out For 17

65–77 Common Stock 18

78–89 Stock Splits and Dividends 19

90–104 Preferred Stock 21

105–108 American Depositary Receipts 23

109–118 Rights and Warrants 24

Chapter 3: Corporate and U.S. Government Debt Securities 27

The Problems You’ll Work On 27

What to Watch Out For 27

119–129 Types of Bonds 28

130–140 Price and Yield Calculations 29

141–155 Comparing Bonds 31

156–164 Convertible Bonds 33

165–181 U.S. Government Securities 34

182–189 Money Market Instruments 36

190–197 Accrued Interest 37

198–208 CMOs and CDOs 38

Chapter 4: Municipal Bonds 41

The Problems You’ll Work On 41

What to Watch Out For 41

209–224 GO and Revenue Bonds 42

225–244 Other Municipal Bonds and Notes 44

245–259 Tax Treatment of Municipal Bonds 46

260–272 Primary Market 49

273–324 Analysis and Recommendations 50

325–352 Municipal Bond Rules 57

Chapter 5: Margin Accounts 63

The Problems You’ll Work On 63

What to Watch Out For 63

353–356 Paperwork 64

357–366 Initial Margin Requirements 64

367–372 Long Account Calculations 65

373–375 Short Account Calculations 66

376–377 Combined Accounts 67

378–382 Excess Equity 67

383–386 Restricted Accounts 68

387–392 Rules 68

Chapter 6: Packaged Securities 71

The Problems You’ll Work On 71

What to Watch Out For 71

393–415 Types of Funds and Investment Recommendations 72

416–419 Discounts and Methods of Investing 75

420–423 Determining the Sales Charge and Public Offering Price 75

424–434 Taxation and Rules 76

435–440 Real Estate Investment Trusts 77

441–456 Fixed and Variable Annuities 78

Chapter 7: Direct Participation Programs 81

The Problems You’ll Work On 81

What to Watch Out For 81

457– 462 General and Limited Partners 82

463–467 Partnership Paperwork 82

468–481 Partnership Taxes 83

482–496 Checking Out Types of Partnerships 85

Chapter 8: Options 89

The Problems You’ll Work On 89

What to Watch Out For 89

497–519 Option Basics 90

520–528 Standard Option Math 92

529–544 Straddles and Combinations 94

545–569 Spreads 96

570–588 Stock and Options 99

589–599 Multiple Option Contracts 102

600–604 Splits and Dividends 103

605–623 Currency, LEAPS, Yield, and Index Options 104

624–640 Option Markets and Option Rules 106

Chapter 9: Portfolio and Securities Analysis 109

The Problems You’ll Work On 109

What to Watch Out For 109

641–648 Knowing Your Customer 110

649–659 Portfolio Management 111

660–672 Fiscal Policy, Money Supply, and the Fed 113

673–677 Definitions and Economic Indicators 115

678–693 Fundamental Analysis 115

694–704 Types of Issues and Risks 118

705–715 Technical Analysis 119

716–720 Indexes and Circuit Breakers 120

Chapter 10: Orders and Trades 123

The Problems You’ll Work On 123

What to Watch Out For 123

721–727 Securities Markets 124

728–735 Primary and Secondary Markets 125

736–741 Broker-Dealer 126

742–755 Types of Orders 127

756–762 Short Sales 129

763–773 Market Maker’s Book 130

774–780 Consolidated Tape 132

781–786 Reporting Systems 133

787–792 Securities Exchange Act of 1934 134

Chapter 11: Taxes and Retirement Plans 135

The Problems You’ll Work On 135

What to Watch Out For 135

793–798 Tax Categories and Types of Income 136

799–806 Interest Income and Taxes on Dividends 136

807–815 Capital Gains and Losses 138

816–822 Accretion and Amortization 139

823–829 Wash Sales, Gift, and Estate Taxes 141

830–848 Qualified and Non-Qualified Plans 142

849–860 Traditional and Roth IRAs 144

861–864 Health Savings Accounts 146

Chapter 12: Rules and Regulations 147

The Problems You’ll Work On 147

What to Watch Out For 147

865–879 SROs and Agent Registration 148

880–890 The USA Patriot Act and Anti-Money

Laundering Rules 150

891–912 Opening Customer Accounts 152

913–929 Order Tickets, Trade Confirmations, and Account Statements 155

930–946 Payment and Delivery 158

947–952 Complaints and Legal Remedies 160

953–958 Transferring Accounts 161

959–982 Other Important Rules 162

983–993 Violations 165

994–1001 FDIC and SIPC 167

Part II: The Answers 169

Chapter 13: Answers 171

Index 345