And yes, you'll see .equals() on the exam quite a bit, along with ==. Make sure you know them well. The OCA 7 is not to be taken light-heartedly. Consider taking the Enthuware mock exams for 1Z0-803, the cost is only ten bucks for several OCA 7 mock exams.
Yes that is part of the test. Understanding how memory is allocated in the stack/heap helps explain when the == versus the equals method should be used.