Series 7 General Securities Representative Exam Practice Test

Free 5-question sample test with instant feedback. See how ready you are.

Loading quiz...

Sample Questions

Question 1

What is the primary distinction between a listed security and an OTC security?

Answer: A listed security trades on a registered national securities exchange (e.g., NYSE or Nasdaq) and must meet the exchange's listing requirements, while an OTC security is not listed on a formal exchange and trades through dealer networks.

Question 2

What is the role of a Designated Market Maker (DMM) on the NYSE?

Answer: A DMM is obligated to maintain a fair and orderly market in assigned securities by posting continuous two-sided quotes and stepping in as buyer or seller of last resort when there is insufficient public order flow.

Question 3

In the context of exchange trading, what does 'auction market' mean?

Answer: In an auction market, buyers and sellers submit competing bids and offers simultaneously, and trades execute when a buyer's bid matches a seller's offer, with price discovery driven by supply and demand among participants.

Question 4

What is a market maker in the OTC market, and what is their primary obligation?

Answer: A market maker is a dealer firm that continuously posts firm bid and ask quotes for a specific OTC security and is obligated to buy or sell at least one normal unit of trading at their quoted prices.

Question 5

What is the OTC Bulletin Board (OTCBB) and how does it differ from the OTC Markets Group tiers?

Answer: The OTCBB was an electronic quotation system operated by FINRA for OTC securities; it has since been phased out. The OTC Markets Group now organizes OTC securities into three tiers: OTCQX (highest), OTCQB, and OTC Pink (lowest standards).