A long margin account shows market value of $40,000 and a debit balance of $22,000. Using a 50% Reg T requirement and 25% maintenance, which BEST describes the account?

It is restricted by $2,000 and no maintenance call is due

It has $2,000 of excess equity that is credited to SMA

It is subject to a $2,000 maintenance call

It is restricted by $4,000 and a maintenance call is due because equity has fallen below 50% of market value

A customer's long margin account has $4,000 of SMA. The market then falls so that equity is below 50% of market value but still above the 25% maintenance level. What happens to the SMA?

It remains $4,000 and may still be used if maintenance is not violated

It is reduced to zero because the account is restricted, and it can be rebuilt only by a new cash deposit

It is reduced in proportion to the market decline

It is converted into a maintenance call

A customer enters a GTC buy limit order for 1,500 shares marked all or none. Which statement is TRUE?

It must be filled in full but need not be filled immediately

It must be filled in full immediately or be canceled, like a fill-or-kill order

It may be filled in several partial lots over time

It expires at the end of the trading day

Before accepting a customer's order to sell short an equity security, what must the broker-dealer do under Reg SHO?

Have reasonable grounds to believe the security can be borrowed for delivery and document it

Obtain written approval from the issuer

Wait for an uptick in the security's price

Confirm the customer already owns shares of the security, because Reg SHO bans short sales by customers who hold no position

Which item is NOT required to appear on a customer's trade confirmation?

The customer's investment objective

Whether the firm acted as agent or principal

The commission charged on an agency trade

Which statement BEST describes a seller's option contract?

The seller may deliver on a date later than regular way, as agreed at the time of trade

The buyer chooses the settlement date after the trade

The trade must settle the same day as the trade date

The settlement date is set later by an underwriting syndicate, and the buyer may cancel the trade if delivery is late

Series 7: F4: Obtains and Processes Transaction Instructions

Function 4 is 11% of the Series 7 (14 questions): order handling, confirmations, settlement, complaints and margin..

Updated 2026-09-23 · 4 sources · By the SeriesPrepKit team

Exam weight

11%

Scored questions

Exam

Series 7

Outline

FINRA 2025

Where it sits in the outline

Official outline section: F4: Obtains and Processes Transaction Instructions, 11% of the Series 7 (14 of 125 scored questions), per FINRA - Series 7 Content Outline (2025).

Function 4 is 11% of the Series 7 (14 questions): order handling, confirmations, settlement, complaints and margin.

Key concepts

Orders and execution. Market, limit, stop and stop-limit orders; agency vs. principal capacity; best execution.

Confirmations and settlement. Confirmations disclose trade details and capacity; regular-way settlement for most securities is T+1.

Margin. Reg T sets the initial requirement (50%); FINRA Rule 4210 sets the $2,000 minimum and maintenance levels. Margin sits in outline section 4.4.

Complaints. Written complaints must be recorded and kept; the rep does not resolve them privately with the customer.

Worked example

Buying power from SMA

A long margin account has LMV $40,000 and a debit of $15,000, so equity is $25,000. Reg T requires $20,000 (50%), leaving $5,000 of excess equity credited to SMA. Buying power = 2 x $5,000 = $10,000 of additional marginable stock without depositing cash.

Common traps

Using the long maintenance percentage (25%) on a short account.
Assuming a stop order guarantees the stop price; once triggered it is a market order.

Practice questions on this topic

Series 7 practice questions: Obtains and Processes Transaction Instructions

A long margin account has a market value of $50,000 and a debit balance of $20,000. SMA equals the account's excess equity. What is the customer's buying power?

Drill this section in the full Series 7 bank

Outline-weighted original questions with explanations, section drills and timed full-length exams. $119 one-time, 12 months, free access extension until you pass.

Get Series 7 access - $119

Frequently asked questions

How much of the Series 7 is obtains and processes transaction instructions?

Official outline section: F4: Obtains and Processes Transaction Instructions, 11% of the Series 7 (14 of 125 scored questions), per FINRA - Series 7 Content Outline (2025).

Sources

FINRA - Series 7 Content Outline (2025) (accessed 2026-09-23)
Federal Reserve Regulation T (12 CFR Part 220) (accessed 2026-09-23)
FINRA Rule 4210 - Margin Requirements (accessed 2026-09-23)
SEC - Shortening the securities settlement cycle to T+1 (compliance date May 28, 2024) (accessed 2026-09-23)