Series 7 practice questions and answers 2026. Tap an option to test yourself — you'll see the correct answer and a plain-English explanation for every question. Free, no login.
Q21Rule 10b-5 was enacted in 1951 and listed acts/practices that were prohibited from being used by <code>________</code>.
✓ Correct answer: D. Any person
10b-5 lists acts/practices that are prohibited from being used by any person engaging in securities transactions.
Q22Trades appear on Tape A as follows:<br/><br/>XYZ 49……..XYZ 48.95……..XYZ 48.90…….XYZ 49.05<br/><br/>Your customer’s 100 share order to sell XYZ at 49 stop, GTC placed prior to the above trade reports would be executed at:
✓ Correct answer: D. 48.95
Sell stop orders are placed below the market. Sell stop orders must first be triggered, also called activated or elected, by a trade at or below the stop price. Once triggered, they become market orders and will be executed at the next available price. The trade at 49 triggers this order. The execution takes place at 48.95.
Q23Which of the following will not lend money to an agent of a broker-dealer?
✓ Correct answer: A. a mortgage broker.
Mortgage brokers work to make loan arrangements; they are not money lenders. Reps are not permitted to borrow money from clients who act as loan "arrangers," but they can borrow from other lenders, including banks, broker/dealers as in margin account lending, and their own employer or affiliates thereof.
Q24What is required for an offering to be an intrastate offering, according to Rule 147?
✓ Correct answer: A. all of these are required
All of these requirements must be met in order for an offering to qualify for an intrastate offering under Rule 147.
Q25Paying a brokerage firm for services through commission revenue is doing so in
✓ Correct answer: B. soft dollars
<strong>Soft dollars</strong> are a means of paying brokerage firms for their services through commission revenue, as opposed to through normal direct payments (hard-dollar fees). The investing public tends to have a negative perception of soft-dollar arrangements, because they believe that buy-side firms should pay expenses out of their profits, rather than from investors' pockets.
Q26In case an investor misses the margin call and is not able to deposit additional funds, <code>________</code>.
✓ Correct answer: D. The securities will be sold to recoup the losses (liquidation)
The brokerage would sell the securities to recoup the amount lent. This is known as liquidation. Liquidation results in selling at a lower price than the market and results in further trading losses.
Q27Mr. Watney has placed a buy order for 1000 shares of ABC at the market. The execution price was $42 in his cash account on Wednesday, February 4th. If he fails to make payment by Monday, February 9th, the most likely consequence will be:
✓ Correct answer: C. no extension of time is necessary under these circumstances: he has two additional business days in which to make payment.
Regulation T states that public customers are given 2 business days beyond regular way settlement to make payment. Therefore, non payment in T+3 does not result in any action.
Q28What is a broker/dealer allowed to do in order to fulfill a customer's order to purchase an over-the-counter stock?
✓ Correct answer: A. all of these
These are all typical methods the broker uses to fulfill the client's order.
Q29Which of the following is not a requirement for advertisements of investment company products that utilize rankings?
✓ Correct answer: D. Past performance is indicative of future results
Advertisements of investment company products that utilize rankings must state the fact that past performance is no guarantee of future results, the name of the category (i.e., high yield), the name of the ranking entity, as well as the time period and its ending date.
Q30Which of these strategies is illegal?
✓ Correct answer: C. Late trading
Late trading is an illegal activity that is undertaken by some investors whereby they trade after the fund NAVs have been calculated but get the price calculated at the close of day.
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