Series 7 Last-Minute Exam-Day Cheat Sheet
Concentrated high-yield rules, settlement clocks, day counts, and order placement matrices for final review before walking into the Prometric test center.
High-Frequency Exam Trap
1. Settlement Cycles & SEC Rule 15c6-1 (May 2024+ Update)
| Security Type | Regular-Way Settlement | Cash Settlement | Governing Rule / Notes |
|---|---|---|---|
| Equities (Common & Preferred Stock) | T + 1 Business Day | Same Day (Trade Date by 2:30 p.m. ET) | SEC Rule 15c6-1 (transitioned from T+2 to T+1) |
| Corporate Debt & Municipal Bonds | T + 1 Business Day | Same Day | MSRB Rule G-12 & FINRA Rule 11140 (now standard T+1) |
| U.S. Treasury Bills, Notes & Bonds | T + 1 Business Day | Same Day | Federal Reserve wire system; accrued interest actual/actual |
| Options Trades (Buying / Selling Contracts) | T + 1 Business Day | N/A | Options Clearing Corporation (OCC) cash settlement |
| Options Exercise (Stock Delivery) | T + 1 Business Day | Same Day if arranged | Settles like underlying stock (T+1 under updated rules) |
| Reg T Payment Due Date | T + 3 Business Days (S + 2) | Same Day | Customer has settlement + 2 business days to pay in full |
💡 Pro Tip:Remember: If a trade occurs on Friday, T+1 settlement is MONDAY. Reg T payment (T+3) is due WEDNESDAY.
Calculation Baseline
2. Accrued Interest & Day Count Conventions
| Security Category | Day Count Convention | Settlement Basis | Accrued Interest Cutoff |
|---|---|---|---|
| Corporate Bonds | 30 / 360 Day Count (every month = 30 days) | T + 1 Business Day | Up to but NOT including settlement date |
| Municipal Bonds | 30 / 360 Day Count (every month = 30 days) | T + 1 Business Day | Up to but NOT including settlement date |
| U.S. Treasury Notes & Bonds | Actual / Actual (real days in month, 365/366 in year) | T + 1 Business Day | Up to but NOT including settlement date |
| Zero-Coupon Bonds & Defaulted Debt | Flat (Trades without accrued interest) | T + 1 Business Day | Buyer pays clean market price; no accrued interest |
💡 Pro Tip:Accrued interest is always calculated starting on the dated date or last coupon date, through the day BEFORE settlement date!
Order Routing Rule
3. Order Types & Market Matrix (BLiSS vs SLoBS)
| Acronym | Order Types Included | Placement vs Market | Ex-Date Adjustment (Cash Dividend) |
|---|---|---|---|
| SLoBS | Sell Limit & Buy Stop (or Buy Stop-Limit) | Placed ABOVE the current market price | NEVER automatically reduced on ex-dividend date |
| BLiSS | Buy Limit & Sell Stop (or Sell Stop-Limit) | Placed BELOW the current market price | AUTOMATICALLY reduced by full dividend on ex-date (unless DNR - Do Not Reduce) |
| Buy Stop Order | Protects short positions / Triggers on breakout | Entered above current market | Triggers at or through stop price, executes immediately as a market order |
| Sell Stop Order | Protects long profits / Limits downside loss | Entered below current market | Triggers at or below stop price, executes immediately as a market order |
💡 Pro Tip:BLiSS orders are below market and get adjusted downward on ex-date. Remember: 'BLiSS falls down'.
Core Bond Theory
4. Bond Yield Hierarchy (The See-Saw / Teeter-Totter)
| Price Relationship | Yield Ordering (Lowest to Highest) | Premium / Discount Effect | Call Risk |
|---|---|---|---|
| Bond Sold at DISCOUNT (< Par $1,000) | Nominal (Coupon) < Current Yield < YTM < Yield to Call (YTC) | Investor earns capital gain plus coupon | Quote the lowest yield: Must quote YTM to customer |
| Bond Sold at PAR (= Par $1,000) | Nominal = Current Yield = YTM = YTC | All yield measures are exactly identical | No quote ambiguity |
| Bond Sold at PREMIUM (> Par $1,000) | YTC < YTM < Current Yield < Nominal (Coupon) | Capital loss at maturity drags down yield | Quote the lowest yield: Must quote Yield to Call (YTC)! |
💡 Pro Tip:FINRA & MSRB confirmation rule: The confirmation must always display the 'Yield to Worst' (YTW). For premium bonds, that is always YTC!
Memorization Checklist
5. Compliance Deadlines, Thresholds & Account Rules
| Regulatory Requirement | Time Limit / Dollar Threshold | Governing Agency | Core Requirement |
|---|---|---|---|
| Currency Transaction Report (CTR) | Cash currency deposits > $10,000 in a single day | FinCEN / IRS (Form 112) | Must be filed within 15 calendar days; customer may be informed |
| Suspicious Activity Report (SAR) | Suspicious transactions ≥ $5,000 | FinCEN (Form 111) | Must file within 30 calendar days; STRICTLY CONFIDENTIAL (cannot disclose to client) |
| Options Account Agreement | Must be signed & returned within 15 CALENDAR days of account approval | FINRA / OCC | If not received in 15 days, customer can only execute CLOSING transactions |
| Reg T Margin Initial Deposit | 50% of purchase or $2,000 minimum equity (whichever is greater) | Federal Reserve Board Reg T | Must deposit cash or 200% in marginable securities within S+2 (T+3) |
| Free-Riding Violation | Selling stock before paying for the original purchase | Reg T / FINRA | Account frozen for 90 days (cash in advance required for all trades) |
| SEC Rule 144 Restricted Stock | 6 months holding (reporting company) or 1 year (non-reporting) | SEC | Volume limit in 90 days: greater of 1% outstanding shares OR 4-week avg weekly volume |
| MSRB Rule G-37 Political Contributions | $250 per election cycle by MFP for candidate they can vote for | MSRB | Violation triggers automatic 2-YEAR BAN on negotiated muni underwriting! |
| Form U4 / U5 Updates | 30 calendar days for statutory disqualifications or termination | FINRA | Firm must file Form U5 within 30 days of termination and provide copy to representative |
💡 Pro Tip:SAR is 30 days and NEVER disclose to client. CTR is 15 days. Options agreement is 15 days.