Free FINRA Series 7 (General Securities Representative) Opening Accounts Practice Questions
Account opening and customer documentation on the FINRA Series 7 exam covers new account forms, suitability requirements (FINRA Rule 2111), anti-money laundering (AML) compliance, Customer Identification Program (CIP), and fiduciary obligations.
Sample Questions
Question 1
Easy
In a Delivery Versus Payment (DVP) account, settlement occurs when:
Solution
Choice B is correct because Delivery Versus Payment (DVP) accounts require the simultaneous exchange of securities and payment. The customer's agent bank delivers payment at the same time the broker-dealer delivers the securities, eliminating settlement risk.
Question 2
Medium
When a broker-dealer opens a new retail cash brokerage account, all of the following are required EXCEPT:
Solution
C is correct. A customer signature is not required to open an ordinary cash account; the customer's signature on the account agreement becomes necessary for margin, options, or discretionary accounts. Opening a retail cash account does require CIP identity verification, written principal approval, and delivery of the recorded account information to the customer within 30 days of opening (and again at least every 36 months).
Question 3
Hard
A firm opens a discretionary, fee-based advisory account for a 71-year-old retail customer who trades infrequently. All of the following are required of the firm EXCEPT:
Solution
D is correct. Once the customer has granted written discretionary authority and a principal has approved the account, the representative may enter orders without consulting the customer on each transaction—that is the very purpose of discretion. The firm is, however, required to obtain prior written discretionary authorization, secure principal approval and ongoing review of the discretionary trading, and make reasonable efforts to request a trusted contact person under FINRA Rule 4512.