Economics + Analysis
8%of exam
Investment Vehicles
17%of exam
Recommendations + Strategies
30%of exam
Laws + Ethics
45%of exam
Quick Facts
- Exam
- Series 66
- Name
- Uniform Combined State Law
- Scored
- 100 MCQ
- Pretest
- 10 unscored
- Time
- 150 min
- Pass
- 73/100
- Fee
- $177
- Corequisite
- Series 7
- Window
- 120 days
Ratio Picker
- Stock earnings multiple→P/E
- Accounting value comparison→P/B
- Short-term solvency→Current ratio
- Strict liquidity→Quick ratio
- Leverage level→Debt/equity
- Income return→Dividend yield
Ratios
- P/E
- Price per earnings
- P/B
- Price per book
- Current ratio
- Current asset coverage
- Quick ratio
- No inventory liquidity
- Debt/equity
- Leverage measure
- Dividend yield
- Income per price
- Payout ratio
- Dividends per earnings
Statistics
- Mean
- Arithmetic average
- Median
- Middle value
- Mode
- Most frequent
- Range
- High minus low
- Std dev
- Volatility around mean
- Beta
- Market sensitivity
- Alpha
- Excess benchmark return
- Sharpe
- Risk-adjusted return
TVM + Valuation
- PV
- Discounted future cash
- FV
- Compounded current cash
- NPV
- PV minus cost
- IRR
- NPV equals zero
- DCF
- Cash-flow valuation
- Correlation
- Relationship strength
- Rule 72
- Doubling estimate
Bond Risk
Long duration hates rising rates.
DurationRatesPriceInverse
Technical vs Fundamental
Technical
- Price patterns
- Volume trends
- Market behavior
Fundamental
- Financial statements
- Business value
- Ratios matter
Chart versus company
Vehicle Picker
- Principal protection→CD(Bank deposit)
- Short Treasury cash→T-bill
- Voting ownership→Common stock
- Fixed dividend→Preferred
- NAV redemption→Mutual fund
- Intraday fund→ETF
- Private pooled strategy→Hedge fund
- Market-risk annuity→Variable annuity
Cash + Debt
- CD
- Bank time deposit
- T-bill
- Short Treasury
- Commercial paper
- Short corporate debt
- Coupon
- Stated interest
- YTM
- Hold-to-maturity yield
- YTC
- Yield if called
- Duration
- Rate sensitivity
- Credit spread
- Default-risk premium
Equity + Offerings
- Common
- Voting residual ownership
- Preferred
- Fixed dividend priority
- Convertible
- Exchange into common
- ADR
- Foreign equity receipt
- Preemptive right
- Maintain ownership percent
- Restricted stock
- Resale limits
- IPO
- First public sale
- SPAC
- Blank-check company
Funds + Alternatives
- Mutual fund
- Redeemable NAV shares
- Closed-end fund
- Market-priced shares
- ETF
- Intraday fund trading
- UIT
- Fixed portfolio
- Hedge fund
- Private pooled fund
- REIT
- Real estate pool
- ETN
- Issuer debt note
- Inverse fund
- Opposite index move
Insurance Products
- Fixed annuity
- Insurer guaranteed return
- Variable annuity
- Subaccount market risk
- Indexed annuity
- Index-linked crediting
- Term life
- Temporary death benefit
- Whole life
- Permanent cash value
- Universal life
- Flexible premiums
- Variable life
- Securities registration
Profile Core
GTRLT drives suitable advice.
GoalsTimeRiskLiquidityTax
Suitability vs Fiduciary
Suitability
- Reasonable recommendation
- Client profile
- Transaction focus
Fiduciary
- Client-first duty
- Full disclosure
- Ongoing advice
Suitable not enough
Account Picker
- Education savings→529 plan
- Minor gift→UTMA/UGMA
- Medical tax savings→HSA
- Spousal survivorship→JTWROS
- Separate estate shares→TIC
- Retirement employer plan→401(k)
Client Profile
- Objectives
- Client goals
- Time horizon
- Investment deadline
- Risk tolerance
- Loss comfort
- Liquidity needs
- Cash access
- Tax status
- After-tax impact
- Financial situation
- Assets and income
- Experience
- Investor sophistication
- ESG values
- Nonfinancial constraints
JTWROS vs TIC
JTWROS
- Survivor receives
- Avoids probate
- Equal interest
TIC
- Estate receives
- Specified shares
- Probate possible
Survivor versus estate
Portfolio Theory
- MPT
- Diversification frontier
- CAPM
- Expected return model
- EMH
- Prices reflect information
- Strategic allocation
- Long-term target mix
- Tactical allocation
- Short-term tilts
- Active
- Manager seeks alpha
- Passive
- Tracks benchmark
- DCA
- Fixed periodic investing
Retirement + Accounts
- Traditional IRA
- Pre-tax possible
- Roth IRA
- After-tax contributions
- 401(k)
- Employer defined contribution
- 403(b)
- School/nonprofit plan
- 457
- Deferred-comp plan
- SEP IRA
- Employer-funded IRA
- SIMPLE IRA
- Small-employer plan
- HSA
- Medical tax account
Estate + Ownership
- JTWROS
- Survivor owns all
- TIC
- Decedent share transfers
- TBE
- Spouses only
- TOD
- Securities beneficiary
- POD
- Bank beneficiary
- Per stirpes
- Branch inheritance
- Trust
- Fiduciary ownership
- QDRO
- Divorce plan order
Exam Weights
Eight, seventeen, thirty, forty-five.
EconomicsVehiclesRecommendationsLaws
Series 66 vs Series 65
Series 66
- Needs Series 7
- Agent plus IAR
- 100 scored
Series 65
- No Series 7
- IAR qualification
- 130 scored
Dual versus adviser
Registration Picker
- Firm effects trades→BD registration
- Rep sells securities→Agent registration
- Firm gives advice→IA registration
- Rep gives advice→IAR registration
- SEC adviser in state→Notice filing
- Listed security sold→Federal covered
- Private Reg D sale→Rule 506
- Fraud suspected→Administrator action
Registration Parties
- BD
- Effects securities trades
- Agent
- Represents broker-dealer
- IA
- Paid securities advice
- IAR
- Represents adviser
- Issuer
- Creates securities
- Person
- Legal entity
- Administrator
- State securities regulator
- Federal covered
- SEC preempted security
Adviser Test
ABC makes an IA.
AdviceBusinessCompensation
Agent vs IAR
Agent
- Represents BD
- Effects transactions
- Commission focus
IAR
- Represents IA
- Gives advice
- Fiduciary focus
Sales versus advice
Adviser Rules
- Form ADV
- Adviser registration
- Brochure
- Client disclosure
- Notice filing
- State copy filing
- Custody
- Client asset access
- Discretion
- Trade decision authority
- Soft dollars
- Research via commissions
- Performance fee
- Qualified-client exception
- Code ethics
- Personal trading controls
Antifraud
Exemptions never exempt fraud.
SecuritiesTransactionsFederal coveredNotice filings
BD vs IA
BD
- Transactions business
- Broker/dealer capacity
- Trade compensation
IA
- Advice business
- Securities advice
- Advisory compensation
Trades versus advice
Securities Law
- USA 1956
- Tested state act
- Howey
- Investment contract test
- Registration
- State securities filing
- Exempt security
- Security exempted
- Exempt transaction
- Transaction exempted
- Rule 506
- Federal covered offering
- Accredited investor
- Reg D status
- Antifraud
- Always applies
Security vs Transaction Exemption
Exempt security
- Security status
- All sales exempt
- Example Treasury
Exempt transaction
- Sale status
- One transaction exempt
- Example unsolicited
What versus how
Ethics + Prohibited
- Fiduciary
- Client-first standard
- Best execution
- Favorable reasonable terms
- Churning
- Excessive trading
- Front running
- Trade ahead
- Selling away
- Outside securities sales
- Guarantees
- Improper performance promise
- Pay to play
- Political contribution conflict
- Vulnerable adult
- Exploitation protection
State vs Federal Covered
State registered
- State review
- State filing
- Administrator authority
Federal covered
- SEC preemption
- Notice filing
- Antifraud remains
Preempted still policed
Common Traps
Passing Score
73 correct ≠ Not 72%
Corequisite Order
Either exam first ≠ Both before registration
Model Law
USA 1956 tested ≠ Not USA 2002
Federal Covered
Registration preempted ≠ Antifraud remains
Exempt Transaction
Transaction exempt ≠ Security may not
Administrator Power
Can investigate ≠ Court imprisons
Discretion
Written authority needed ≠ Time/price exception
Performance Fees
Generally prohibited ≠ Qualified-client exception
Soft Dollars
Research allowed ≠ Office rent disallowed
Registration Result
Exam passes ≠ State licenses
Last Minute
- 1.Laws are 45%
- 2.Pass = 73/100
- 3.Series 7 corequisite
- 4.USA 1956 tested
- 5.ABC defines adviser
- 6.Agent represents BD
- 7.IAR represents IA
- 8.Exemptions never exempt fraud
- 9.Federal covered still antifraud
- 10.Discretion needs writing
- 11.Performance guarantees prohibited
- 12.Administrator cannot imprison
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