Free Series 66 Practice Exam

What’s on the Series 66

• Economic Factors and Business Information8%

  • Analytical Methods

    Covers time-value-of-money math (IRR, NPV, future value), descriptive statistics (mean, median, standard deviation, alpha/beta/Sharpe ratio, correlation), financial ratio analysis (current, quick, debt-to-equity), and valuation multiples like price-to-earnings and price-to-book.

• Investment Vehicle Characteristics17%

  • Cash and Cash Equivalents

    Insured deposit products (demand deposits, CDs) and money market instruments such as commercial paper and Treasury bills.

  • Fixed Income Valuation

    How bonds are priced and compared using duration, maturity, yield-to-call/maturity, coupon, conversion value, credit ratings, credit spreads, and discounted cash flow.

  • Types of Equity Securities

    Common stock (domestic, foreign, ADRs) and preferred/convertible/floating-rate preferred stock.

  • Equity Valuation Factors

    Technical analysis, fundamental analysis, dividend discount models, and discounted cash flow approaches to valuing stocks.

  • Characteristics of Equity Securities

    Shareholder rights (voting, preemptive rights, liquidation preference), restricted/resale-restricted stock, dividends, and incentive vs. nonqualified employee stock options.

  • Equity Public Offerings

    IPOs, secondary offerings, and SPAC/blind-pool/blank-check structures.

  • Types of Pooled Investments

    Open- and closed-end mutual funds, private funds (hedge funds, private equity, venture capital), UITs, ETFs, and liquid vs. non-liquid REITs.

  • Characteristics of Pooled Investments

    Share classes, liquidity, tax treatment, fee structures, NAV and premium/discount pricing, risk/benefit tradeoffs, and comparison factors like benchmarks and manager tenure.

  • Futures and Options

    Basic definitions of futures and options contracts.

  • Alternative Investments

    Risk and application of leveraged funds, inverse funds, structured products, and exchange-traded notes.

  • Insurance-Based Products

    Fixed, variable, and indexed annuities, and whole/term/universal/variable life insurance definitions.

  • Other Assets

    Commodities, precious metals, and the definition/characteristics/risks of digital assets.

• Client/Customer Investment Recommendations and Strategies30%

  • Type of Client/Customer

    Individuals and sole proprietors, business entities (partnerships, LLCs, C/S-corps), trusts/estates, and foundations/charities as client types.

  • Client/Customer Profile

    Gathering and using financial goals, cash flow/balance sheet/tax situation, risk tolerance, non-financial factors (values, life stage, behavioral finance), and time horizon to build a client profile.

  • Capital Market Theory

    Core investment theories — CAPM, Modern Portfolio Theory, and the Efficient Market Hypothesis.

  • Portfolio Management Strategies, Styles, and Techniques

    Strategic vs. tactical asset allocation; active/passive/growth/value/income styles; and techniques like diversification, sector rotation, dollar-cost averaging, and leveraging.

  • Tax Considerations

    Individual income tax basics (capital gains, tax basis, AMT), entity-level taxation, and estate/gift tax fundamentals including exemptions and portability.

  • Retirement Plans

    Traditional/Roth IRAs, solo 401(k)s, qualified plans (401(k), 403(b), 457, SEP, SIMPLE), and nonqualified plans.

  • ERISA Issues

    Fiduciary duties under ERISA, including qualified default investment alternatives and diversification requirements.

  • Special Types of Accounts

    Education accounts (529s, Coverdell), UTMA/UGMA custodial accounts, and health savings accounts.

  • Ownership and Estate Planning Techniques

    Account titling (JTWROS, tenants in common, tenancy by entirety), TOD/POD designations, beneficiary designations, wills/trusts basics, QDROs, and donor-advised funds.

  • Trading Securities

    Order types and trading terminology, the roles of broker-dealers/custodians/market makers, trading costs, and best execution obligations.

  • Portfolio Performance Measures

    Return calculations (risk-adjusted, time-weighted, dollar-weighted, IRR, after-tax), current yield, and use of relevant benchmarks.

• Laws, Regulations, and Guidelines Including Prohibition on Unethical Business Practice45%

  • Regulation of Investment Advisers

    Definitions, notice-filing, registration and books-and-records requirements for state-registered and federal covered investment advisers, and supervision of IARs.

  • Regulation of Investment Adviser Representatives

    Who qualifies as an IAR, registration/exclusion rules, and ongoing requirements like continuing education and reportable-event disclosures.

  • Regulation of Broker-Dealers

    Broker-dealer definitions, registration/exclusion requirements, and supervisory obligations over agents.

  • Regulation of Agents of Broker-Dealers

    Definition of an agent and the registration/maintenance requirements that apply to them.

  • Regulation of Securities and Issuers

    Definitions of securities/issuers, state registration requirements, registration exemptions, and state antifraud/enforcement authority.

  • Remedies and Administrative Provisions

    Powers of the state securities Administrator, administrative actions, and other penalties/liabilities.

  • Communication with Clients and Prospects

    Required disclosures, bans on misrepresenting registration status or guaranteeing performance, client agreements, and rules governing advertising across social media, email, and websites.

  • Ethical Practices and Fiduciary Obligations

    Compensation disclosure, custody and discretion rules, AML obligations, conflict-of-interest and prohibited-activity rules (insider trading, selling away, market manipulation, exploitation of vulnerable adults, etc.), cybersecurity/privacy duties, and business continuity planning.