Series 7

Getting Started - Important Series 7 Terms

Here are some of the terms you will need to know before diving in. Obviously, there are hundreds of other terms you need to know. We will address these individually as they come up.
  • Arbitrage: Simultaneous buying and selling of a security to achieve a riskless profit.
  • Bonds: Securities that convey an obligation to pay the debt of a company or governmental entity.
  • Broker-dealer: A firm that buys and sells securities either for its customers (that is, as a broker) or on its own account (that is, as a dealer). In this guide the terms "broker-dealer" and "brokerage" are used interchangeably, if imprecisely.
  • Customer: The person on whose behalf a registered rep trades. In this guide the terms "customer", "client" and "investor" are used interchangeably for style, but the Series 7 exam will use "customer" exclusively.
  • Initial public offering (IPO): The first sale of a security to investors at large; raises funds for the issuing company or agency.
  • Margin: Money borrowed from a brokerage to purchase securities for a customer's account.
  • Mutual fund: A company whose sole business is investing in securities.
  • Options: Securities that convey a right to buy or sell an underlying asset.
  • Registered representative: Someone who works for a federally regulated broker-dealer and handles customers' accounts. Registered reps traditionally carry the job title "account executive", but because other brokerage-related jobs - from sales assistants through middle managers - may from time to time touch clients' money, a broad range of financial industry workers are encouraged to become registered. Passing the Series 7 exam is the major hurdle to becoming a registered rep.
  • Securities: Financial instruments that have value and can be traded.
  • Securities and Exchange Commission (SEC): The federal agency charged with regulating the financial markets.
  • Stocks: Securities that convey partial ownership of a company.



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