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FINRA Series 7 General Securities Representative Exam

4. Obtains and Verifies Orders, Processes Transactions / Order types: practice questions

Our FINRA Series 7 bank has 11 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

A customer marks an open sell stop order "DNR." On the ex-dividend date, the order will:

  1. Be converted into a buy stop order
  2. Be reduced by twice the dividend
  3. Be cancelled by the firm automatically
  4. Not be reduced by the cash dividend
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D. Not be reduced by the cash dividend — Do not reduce instructs the firm not to adjust the order price for cash dividends (Rule 5330).

Question 2

A customer gives a "not held" market order. This lets the representative or trader:

  1. Hold the order until the next business day
  2. Change the number of shares bought
  3. Use judgment on the time and price of execution
  4. Pick a different security for the customer
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C. Use judgment on the time and price of execution — A not-held order grants time and price discretion only; security, action and quantity remain the customer's.

Question 3

On the ex-dividend date, which open orders are reduced by the amount of a cash dividend?

  1. All open orders on the stock
  2. Buy limit and sell stop orders
  3. Sell limit and buy stop orders
  4. Only market orders entered that day
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B. Buy limit and sell stop orders — Orders placed below the market (buy limits, sell stops, sell stop-limits) are reduced; orders above the market are not adjusted (Rule 5330).

Question 4

An immediate-or-cancel order for 1,000 shares receives 400 shares at once. What happens to the other 600 shares?

  1. They are cancelled
  2. They stay open until the end of the day
  3. They are converted to a market order
  4. They remain open until filled
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A. They are cancelled — IOC orders accept any immediate partial execution and cancel the rest.

Question 5

XYZ goes ex-dividend for a $0.50 cash dividend. An open buy limit order at $40.25 will be adjusted to:

  1. $40.25
  2. $40.00
  3. $39.75
  4. $40.75
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C. $39.75 — Under FINRA Rule 5330, open buy limit and sell stop orders are reduced by the dividend on the ex-date unless marked do not reduce (DNR).

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