Series 66 Practice Exam

The NASAA Uniform Combined State Law exam (Series 66 exam), administered by the Financial Industry Regulatory Authority (FINRA), is used to assess your knowledge and abilities to perform adequately as a securities agent and investment adviser representative.

Click “Start Test” above to take a free Series 66 practice exam!

Series 66 Exam Outline

The Series 66 exam contains 110 multiple-choice questions, 10 of which are unscored, and you will be given a time limit of 2.5 hours. The unscored questions are used by FINRA to evaluate questions for future versions of the exam.

The exam is split into four sections:

I. Economic Factors and Business Information (8%)

The 8 scored questions in this section test your knowledge of various aspects of business and economics.

• Descriptive statistics
• Valuation ratios
• Time value of money concepts
• Financial ratios and their uses

II. Investment Vehicle Characteristics (17%)

The 17 scored questions in this section test your knowledge of various characteristics of investments.

Characteristics of pooled investments

• Tax implications
• Share classes
• Pricing
• Liquidity
• Fee structures
• Relative comparisons
• Benefits and risks

Insurance-based products

• Life insurance
• Annuities

Types and characteristics of cash and cash equivalents

• Insured deposits
• Money market instruments

Types of equity securities

• Common stock
• Preferred, convertible preferred stock, floating rate preferred

Valuation factors of equity securities

• Technical analysis
• Fundamental analysis
• Dividend discount
• Discounted cash flow

Characteristics of equity securities

• Shareholder rights
• Restricted stock and resale restrictions
• Dividends
• Employee stock options

Equity public offering

• Initial public offering (IPO)
• Secondary offering
• Special purpose acquisition companies

Types of pooled investments

• Mutual funds
• Private funds
• Unit investment trusts
• Exchange traded funds
• Real estate investment trusts

Valuation factors of fixed income securities

• Yield-to-call
• Bond ratings
• Duration
• Coupon
• Discounted cash flow
• Conversion valuation
• Yield-to-maturity
• Credit spread
• Maturity

Characteristics, risks, and application of alternative investments

• Inverse funds
• Viatical/life settlements
• Exchange traded notes
• Leveraged funds
• Structured products

Futures and options

• Futures definitions
• Options definitions

Other assets

• Commodities and precious metals
• Digital assets

III. Client Investment Recommendations and Strategies (30%)

The 30 scored questions in this section test your knowledge of various types of clients and what investment recommendations you should make.

Tax considerations

• Individual income tax fundamentals
• Corporate, trust, and estate income tax fundamentals
• Estate tax fundamentals
• Gift tax fundamentals

Capital market theory

• Investment models, theories, and hypotheses

Type of client

• Trusts and estates
• Sole proprietorship
• Individual
• Natural person(s)
• Foundations and charities
• Business entities

ERISA issues

• Investment policy statement
• Fiduciary issues
• Prohibited transactions

Portfolio performance measures

• Current yield
• Returns
• Relevant benchmarks

Special account types

• UTMA/UGMA
• Education-related
• Health-savings accounts

Client profile

• Risk tolerance
• Time horizon
• Financial goals and objectives
• Nonfinancial investment considerations
• Client data gathering
• Current and future financial situation

Portfolio management styles, strategies, and techniques

• Styles
• Strategies
• Techniques

Retirement plans

• Qualified retirement plans
• Individual Retirement Accounts
• Nonqualified retirement plans

Ownership and estate planning techniques

• Beneficiary designation
• Methods of ownership transfer
• Trusts and wills
• Pay-on-death/transfer-on-death
• Qualified domestic relations order

Trading securities

• Role of broker-dealers, market makers, custodians, and exchanges
• Terminology
• Costs of trading securities

IV. Laws, Regulations, and Guidelines Including Prohibition on Unethical Business Practices (45%)

The 45 scored questions in this section test your knowledge of various laws and regulations, with some specific focus on prohibition and unethical business practices.

Regulation of investment advisers

• Registration and post-registration
• Investment adviser representative supervision
• Definitions of an investment adviser
• Notice filing requirements
• Exemptions for exempt reporting advisers and private fund advisors

Regulation of investment adviser representatives

• Registration and post-registration
• Definition of an investment adviser representative

Regulation of broker-dealers

• Definition of a broker-dealer

Regulation of agents of broker-dealers

• Definition of a broker-dealer agent

Regulation of securities and issuers

• Registration and post-registration
• State antifraud authority
• Definition of securities and issuers
• Exemptions

Remedies and administrative provisions

• Authority of state securities administrator
• Administrative actions
• Other penalties and liabilities

Communication with clients and prospects

• Performance guarantees
• Correspondence and advertising
• Disclosures
• Client contracts
• Unlawful representations concerning registrations

Ethical practices and fiduciary obligations

• Custody conditions and obligations
• Compensation
• Cyber security, privacy, and data protection
• Client funds and securities
• Business continuity plan
• Conflicts of interest
• Criminal activities

Series 66 Exam Registration

If you are employed or associated with a FINRA member firm, the firm can register you for the exam via a U4 form. If you are not employed or associated with a FINRA member firm, you can open an enrollment window via FINRA’s Test Enrollment Services System (TESS). The exam fee is $177 regardless of which method of registration you choose.

Once your registration request is processed, you will be notified and given a 120-day window to take the exam.

How to Study for the Series 66 Exam

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Test Day

The Series 66 exam is administered at Prometric testing centers across the United States. You should arrive at the testing center 15-30 minutes early to allow time for check-in. If you arrive late, you will not be able to take the exam and your exam fee will be forfeited.

After you arrive, you will be asked to sign in and provide a valid, government-issued photo ID.

Before you enter the testing room, you will be asked to leave all personal items (cell phone, wallet, keys, food, notes, etc.) in an assigned locker.

Once you are in the testing room, you will be given a small whiteboard, dry-erase markers, and noise-canceling headphones. After the exam begins, you will be allowed to take a break. However, the timer will not be paused during your break.

How the Series 66 Exam is Scored

Your test score is placed on a scale with all other test-takers’ test scores, and adjustments are made to the score to account for variations in difficulty. You will receive a preliminary score report as soon as you finish the exam.

The passing score is 73, which means you need to answer 73 questions correctly.

How to Prepare for the Series 66 Exam

How to Study Effectively

Your success on Series 66 test day depends not only on how many hours you put into preparing but also on whether you prepared the right way. It’s good to check along the way to see whether your studying is paying off. One of the most effective ways to do this is by taking Series 66 practice tests to evaluate your progress. Practice tests are useful because they show exactly where you need to improve. Every time you take a free Series 66 exam practice test, pay special attention to these three groups of questions:

• The questions you got wrong
• The ones you had to guess on, even if you guessed right
• The ones you found difficult or slow to work through

This will show you exactly what your weak areas are and where you need to devote more study time. Ask yourself why each of these questions gave you trouble. Was it because you didn’t understand the material? Was it because you didn’t remember the vocabulary? Do you need more repetitions on this type of question to build speed and confidence? Dig into those questions and figure out how you can strengthen your weak areas as you go back to review the material.

Answer Explanations

Additionally, many Series 66 practice tests have a section explaining the answer choices. It can be tempting to read the explanation and think that you now have a good understanding of the concept. However, an explanation likely only covers part of the question’s broader context. Even if the explanation makes sense, go back and investigate every concept related to the question until you’re positive you have a thorough understanding.

Comprehend Each Topic

As you go along, keep in mind that the Series 66 practice test is just that: practice. Memorizing these questions and answers will not be very helpful on the actual test because it is unlikely to have any of the same exact questions. If you only know the right answers to the sample questions, you won’t be prepared for the real thing. Study the concepts until you understand them fully, and then you’ll be able to answer any question that shows up on the test.

Strategy for Series 66 Practice

When you’re ready to start taking practice tests, follow this strategy:

• Keep Practicing. Keep taking practice tests on a regular basis until you run out of practice tests or it’s time for the actual test. Your mind will be ready for the schedule and stress of test day, and you’ll be able to focus on recalling the material you’ve learned.

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