To pass the Series 7 exam, you need high-quality study materials. Don't be afraid to use more than one company's practice questions if you can afford it. Our full package, at www.passthe7.com/fullpackage.htm provides you with a Plain English, readable textbook, a DVD set that you can play on your home entertainment system, and an excellent batch of practice questions.
If you have questions, email me at walker@passthe7.com
Monday, August 1, 2011
Series 7 Practice Exam
Finding high-quality series 7 practice exams is not easy, especially on a budget. But, after the textbook, your practice questions are easily the most important piece of the puzzle. Some companies focus on the quantity of questions--if you do 5,000 questions, you must be ready, even if they're really ony 400 questions and their various alternative versions. Some companies just make the questions "really hard," by writing in opaque language and needlessly confusing the customer. Reminds me of a football coach preparing his team for the big football game by . . . making them carry telephone poles on a hot August afternoon--see the connection?
Me neither.
Most companies have decent practice questions but the weakest explanations we've ever seen. Basically, the "explanation" will say, "the answer is B because A, C, and D are incorrect."
Okay, so what about www.passthe7.com? What's so great about our stuff? We have a large enough batch of questions, a big enough variety, and the best explanations you'll find anywhere--not too short, not too long. The only point on which bigger companies might out-do us is on the look of the interface (millions of $'s can usually buy glossy-looking stuff) and some also track your results and pretend to tell you which "areas" of the test you need more work on. Total gimmick, but it sells. In any case, click the title of this post to get our Pass the 7 ExamCram Online Test Prep and save 12% with this coupon code: webinar.
Me neither.
Most companies have decent practice questions but the weakest explanations we've ever seen. Basically, the "explanation" will say, "the answer is B because A, C, and D are incorrect."
Okay, so what about www.passthe7.com? What's so great about our stuff? We have a large enough batch of questions, a big enough variety, and the best explanations you'll find anywhere--not too short, not too long. The only point on which bigger companies might out-do us is on the look of the interface (millions of $'s can usually buy glossy-looking stuff) and some also track your results and pretend to tell you which "areas" of the test you need more work on. Total gimmick, but it sells. In any case, click the title of this post to get our Pass the 7 ExamCram Online Test Prep and save 12% with this coupon code: webinar.
Tuesday, May 24, 2011
deferred variable annuities
A deferred variable annuity is an investment product with aspects of a retirement plan plus an insurance rider. The "deferred" part means that the individual plans to wait to receive money, and will likely be penalized with a surrender charge if he changes his mind and takes some money out before the surrender period has elapsed. The "variable" part means that when the individual begins to receive payments, those payments will--yes--vary. Is the "annuitant" assured of getting his principal/original investment back? No. During the "accumulation phase" his beneficiary would receive at least what he put into the contract if he were to die, but that's a different matter. Because of the surrender charge, a deferred variable annuity is only suitable for someone with no liquidity needs on this money. They also should have maxed out all other retirement vehicles before putting money into a variable annuity. The ideal candidate for a deferred variable annuity is someone who has already maxed out the 401K and any other plans but still has lots of money he wants to grow tax-deferred. As long as he doesn't need to touch this money for a while and as long as he's comfortable being in the stock and bond markets, subject to all kinds of investment risk, the product may be suitable.
Tuesday, May 17, 2011
Open and Closed-End Funds
Wow. Didn't mean to neglect the Pass the 7 blog, but I haven't posted since flippin' February. Not accpetable. Let's start making up for it right now with a fun practice question . . .
Open- and closed-end funds share none of the following characteristics except that:
A. open-end funds must be "diversified" according to the 75/5/10 rule
B. closed-end funds must be "diversified" according to GAAP accounting rules
C. closed-end funds are non-redeemable investment company securities
D. open-end funds may issue preferred shares
EXPLANATION: once again, a mildly confusing topic can become massively confusing if the question is written a certain way. Oh well. Take a deep breath, look at the question from a different angle, and proceed to kick its butt. Do open-end funds have to be diversified? Heck no--it's just that if they want to call themselves "diversified," they have to follow the SEC rule. Closed-end funds don't have to be diversified, either, and even if they did "GAAP Accounting" is nonsense . . . so you can now eliminate the first two answer choices. Boom. See anything wrong with Choice C? Me neither, but let's not make our move too soon. What about D? Isn't it the CLOSED-end fund that might issue preferred shares to use leverage? Yes. D is false. The answer must be . . .
ANSWER: c
Open- and closed-end funds share none of the following characteristics except that:
A. open-end funds must be "diversified" according to the 75/5/10 rule
B. closed-end funds must be "diversified" according to GAAP accounting rules
C. closed-end funds are non-redeemable investment company securities
D. open-end funds may issue preferred shares
EXPLANATION: once again, a mildly confusing topic can become massively confusing if the question is written a certain way. Oh well. Take a deep breath, look at the question from a different angle, and proceed to kick its butt. Do open-end funds have to be diversified? Heck no--it's just that if they want to call themselves "diversified," they have to follow the SEC rule. Closed-end funds don't have to be diversified, either, and even if they did "GAAP Accounting" is nonsense . . . so you can now eliminate the first two answer choices. Boom. See anything wrong with Choice C? Me neither, but let's not make our move too soon. What about D? Isn't it the CLOSED-end fund that might issue preferred shares to use leverage? Yes. D is false. The answer must be . . .
ANSWER: c
Thursday, February 24, 2011
Personal Bankruptcy and FINRA Registration
Can I get registered with FINRA if I've ever declared personal bankruptcy?
This is a question I receive frequently, though not as frequently as the question, "Can I get registered with FINRA if I have a felony conviction?"
Both issues are covered on the U4 and, of course, you never want to lie on your U4, especially if you might get caught. However, a "yes" answer to these sticky questions does not automatically lead to a denial of your application. It's just that a "yes" answer to any felony conviction or any misdemeanor considered "investment-related" is usually a game-over for the applicant. What if you answer "yes" to questions about your personal finances? Let's see how FINRA handles this FAQ:
A personal bankruptcy is not an automatic diqualification from FINRA registration. However, you are required to report and disclose a personal bankruptcy that occured in the previous 10 years. You are required to keep the information on your U4 current at all times and any changes to your disclosure must be made within 30 days. Your firm will help you correctly answer specific questions about bankruptcy on Form U4 and will electronically submit the Form U4 amendment on your behalf.
This is a question I receive frequently, though not as frequently as the question, "Can I get registered with FINRA if I have a felony conviction?"
Both issues are covered on the U4 and, of course, you never want to lie on your U4, especially if you might get caught. However, a "yes" answer to these sticky questions does not automatically lead to a denial of your application. It's just that a "yes" answer to any felony conviction or any misdemeanor considered "investment-related" is usually a game-over for the applicant. What if you answer "yes" to questions about your personal finances? Let's see how FINRA handles this FAQ:
A personal bankruptcy is not an automatic diqualification from FINRA registration. However, you are required to report and disclose a personal bankruptcy that occured in the previous 10 years. You are required to keep the information on your U4 current at all times and any changes to your disclosure must be made within 30 days. Your firm will help you correctly answer specific questions about bankruptcy on Form U4 and will electronically submit the Form U4 amendment on your behalf.
Series 7 Study Materials
Some of the large, long-established test prep companies have done a great job of creating the illusion that they are somehow plugged directly into FINRA and put out "official" FINRA-approved series 7 study materials. Truth is, FINRA approves of no materials and provides no company with any access not provided to other companies. So, how does anyone know what you'll see on your Series 7? They don't. Not really. We all see the FINRA Series 7 outline. We all get feedback from customers as to the kinds of things showing up on the test. And maybe some of the instructors on board have taken the exam in the not-so distant past.
That's it. To illustrate the point, understand that FINRA actually has exams that people take for which no materials have been written. Seriously. FINRA doesn't think you necessarily need a test-prep company in the first place. In their mind, that's just one option available. The other options? Not FINRA's problem to come up with them.
The other day a customer asked how my book compares to the "FINRA/NASD manual" that he currently had. See what I mean? One of the big firms had convinced him that their stuff was the "official, FINRA/NASD-approved license exam manual." Nice marketing campaign that happens to be based on pure BS. My book is as "official" as any other book out there. It's just that my book is written in English. Kind of funny that Series 7 candidates reward the big companies for writing pedantic, elitist, opaque materials not only by continuing to buy them but also by interpreting that approach as a seal of approval from the regulators.
Oh well. The other license exam manuals out there are helpful, but, please, don't assume that some companies put out "official FINRA" materials and others are just winging it. We're all winging it, some more sucessfully than others.
That's it. To illustrate the point, understand that FINRA actually has exams that people take for which no materials have been written. Seriously. FINRA doesn't think you necessarily need a test-prep company in the first place. In their mind, that's just one option available. The other options? Not FINRA's problem to come up with them.
The other day a customer asked how my book compares to the "FINRA/NASD manual" that he currently had. See what I mean? One of the big firms had convinced him that their stuff was the "official, FINRA/NASD-approved license exam manual." Nice marketing campaign that happens to be based on pure BS. My book is as "official" as any other book out there. It's just that my book is written in English. Kind of funny that Series 7 candidates reward the big companies for writing pedantic, elitist, opaque materials not only by continuing to buy them but also by interpreting that approach as a seal of approval from the regulators.
Oh well. The other license exam manuals out there are helpful, but, please, don't assume that some companies put out "official FINRA" materials and others are just winging it. We're all winging it, some more sucessfully than others.
Avoid Rigid Thinking
The other day a customer wrote an email asking about debit and credit spreads. He had been working with another vendor's material and had someone thought that memorizing "right to buy" and "obligation to sell" was about all he had to do to get through this whole options thing. In my book, I explain that if you buy the ABC Oct 50 call and sell the ABC Oct 55 call, you have created a debit spread. Why? The right to buy stock at $50 is worth more than the right to buy it for $55.
Whoah--slam the brakes, shut the system down, this guy was not happy with that explanation. He was convinced that there WAS no right to buy stock at $55 since this guy SOLD that call. This is why rigid thinking can be so detrimental on the Series 7 exam. The little options quadrant that everyone learns is helpful in some cases, but--like the T-chart--has its limitations, too. I need you to accept this statement, everyone: a call option is the RIGHT TO BUY stock at a set price.
Period.
You can buy that right, sell that right, or just take a pass on the whole thing. Okay? Whatever the premiums are, somebody paid more for the right to buy ABC for $50 than anyone paid for the right to buy it for $55. This guy bought the more valuable call and sold the less valuable call. Debit to his account. More money went out than came in. On the other hand, if he buys an ABC Dec 40 call and sells an ABC Dec 30 call, he sells the more valuable option and, therefore, starts with a credit. Whatever the premiums are, the right to buy stock for $30 is worth more than the right to buy it for $40. He took in more money than he spent. A credit to his account; credit spread.
I know it's hard to see this without the premiums provided, but you have to learn how to do that for your exam. What really helped me see this concept was pulling up real-world quotes on options. You'll see calls on the left, puts on the right. And, you'll see that as strike prices drop, call premiums rise and put premiums fall. Until you can see that and understand it fully, options questions will likely seem like a major challenge when, in fact, they should be among the easiest questions you encounter at the test center.
Whoah--slam the brakes, shut the system down, this guy was not happy with that explanation. He was convinced that there WAS no right to buy stock at $55 since this guy SOLD that call. This is why rigid thinking can be so detrimental on the Series 7 exam. The little options quadrant that everyone learns is helpful in some cases, but--like the T-chart--has its limitations, too. I need you to accept this statement, everyone: a call option is the RIGHT TO BUY stock at a set price.
Period.
You can buy that right, sell that right, or just take a pass on the whole thing. Okay? Whatever the premiums are, somebody paid more for the right to buy ABC for $50 than anyone paid for the right to buy it for $55. This guy bought the more valuable call and sold the less valuable call. Debit to his account. More money went out than came in. On the other hand, if he buys an ABC Dec 40 call and sells an ABC Dec 30 call, he sells the more valuable option and, therefore, starts with a credit. Whatever the premiums are, the right to buy stock for $30 is worth more than the right to buy it for $40. He took in more money than he spent. A credit to his account; credit spread.
I know it's hard to see this without the premiums provided, but you have to learn how to do that for your exam. What really helped me see this concept was pulling up real-world quotes on options. You'll see calls on the left, puts on the right. And, you'll see that as strike prices drop, call premiums rise and put premiums fall. Until you can see that and understand it fully, options questions will likely seem like a major challenge when, in fact, they should be among the easiest questions you encounter at the test center.
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