Series 66 Exam

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History

The Uniform Combined State Law Examination (known as the Series 66) was first implemented in 1995.[1] The examination was developed by the North American Securities Administrators Association (NASAA). The exam was designed to consolidate the requirements of the Series 63 and Series 65 exams into one combined exam so that candidates could meet state qualification requirements for efficiently.[2]

Due to the fact that the financial industry changes rapidly over time and that laws and regulations are continually revised, the Series 66 is constantly under revision, with new test items being created, assessed, and implemented and old items being revised or removed every year. Changes to the exam content outline happen much less frequently.[3] The most recent version of the exam outline went into effect in 2010.[4]

Function of the Test

Series 66 Study Guide

The Series 66 is a qualification exam for securities agents and investment adviser representatives. The examination tests candidates on knowledge, skills, and competencies related to providing investment advice and effecting securities transactions for clients.[5] The examination is taken after candidates have passed the FINRA Series 7 exam.[6] Candidates who pass both examinations are eligible to apply to register with their state to obtain a license to practice.[5]

The NASAA does not appear to publish statistics regarding how many candidates take the Series 66 each year or how many candidates pass the examination.

Test Format

Series 66 Flashcards
Sections of the Series 66 Test
Series 66 Test Subject Areas Percent # of Items
Economic Factors and Business Information 5% 5
Investment Vehicle Characteristics 15% 15
Client Investment Recommendations and Strategies 30% 30
Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices 50% 50
Total 100% 100%

Test Structure

The Series 66 Exam, also called the Uniform Combined State Law Exam, is made up of 110 questions, including 10 unscored, pretest questions, that have to do with five major domains. The content domains are: Economic Factors and Business Information; Investment Vehicle Characteristics; Client Investment Recommendations and Strategies; and, lastly, Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices. The time allotted to complete this exam is 2.5 hours. [7]

Test Environment

Testing locations for the Series 66 Exam are provided by FINRA. Candidates are expected to arrive about 30 minutes before their scheduled appointment. For admission, at least one form of valid identification that is government issued, and contains a photo is required. Personal items such as books, bags, and notes are not allowed in the testing area. The testing center will provide a locker to store personal items while the test is in session. Personal calculators are not allowed during the exam. A dry erase board, markers, and a calculator will be provided for use during the exam.[8]

Test Content

  1. Which of the following is true regarding types of risks related to a client’s portfolio?
    A. The level of unsystematic risk will decrease as more securities are added to the portfolio
    B. The level of systematic risk will decline as more securities are added to the portfolio
    C. Unsystematic risk can be measured by a portfolio’s beta
    D. Default risk is an example of systematic risk
  2. Which component of an option is not considered fixed?
    A. Premium
    B. Expiration
    C. Strike price
    D. Size of contract
  3. An investor who advocates tactical asset allocation is likely to…
    A. support the Efficient Market Hypothesis
    B. support the strong form of Efficient Market Hypothesis
    C. believe the market contains inefficiencies
    D. support a passive investment strategy tactical asset allocation is likely to…
  4. A registered investment adviser must file _________ to register with the SEC and file ___________ to cease operations as an investment adviser.
    A. ADV Part I; ADV Part II
    B. ADV Parts I and II; ADV- W
    C. ADV Part I; ADV- W
    D. ADV Parts I and II; ADV Part III
  5. When must a Form 4 filing be made to report changes of securities ownership of a company’s directors, officer or beneficial owner of more than 10% of the securities?
    A. Within the calendar month in which the change occurred
    B. By the end of the day of the change in ownership
    C. By the end of the second business day following the change in ownership
    D. By the end of the fifth business day following the change in ownership
  6. Which example best portrays a broker who has churned an account?
    A. The broker buys a security for his client at the request of such client
    B. The broker buys a security for a client and, later that year, sells the same security for tax purposes
    C. The broker has discretionary power over a client's account, and purchases an international stock appropriate for such investor's investment objectives
    D. The broker has discretionary power over a client's account, and excessively trades AT&T stock in the account to generate extra commissions

Test Administration

The Series 66 is given at Prometric test centers year-round, but candidates must take the exam within 120 days of applying to the Financial Industry Regulatory Authority (FINRA) to take it.[3] The fee for taking the examination is $145.[5]

Candidates may register for the examination as an individual by completing and filing FINRA's Form U10, but candidates employed by a FINRA member firm may register by having their employer file a Form U4 on their behalf.[3] Candidates who register for the exam using Form U10 do not need a sponsor in order to take the Series 66.[3]

The Series 66 comprises 100 multiple-choice questions and 10 unscored pretest questions which are being assessed for inclusion on future versions of the examination.[5] The time limit for the examination is 150 minutes (two and a half hours).[5]

Unsuccessful candidates who wish to retake the examination must wait a minimum of 30 days before a second attempt may be scheduled. The same 30-day waiting period applies for candidates wishing to take the exam a third time. After that, there is a 180-day waiting period before each subsequent retake may be scheduled.[9] There is no limit to the number of times candidates may take the Series 66 (or any other NASAA exam).[3] Candidates should also be aware that because the Series 63 and 65 examinations fulfill the same requirement as the Series 66 exam, candidates may choose to take the Series 63 and 65 examinations rather than retaking the Series 66 exam.[3]

Candidates who require accommodations for a disability may request such accommodations from FINRA. Candidates must submit an eligibility questionnaire and a verification request form for all accommodation requests.[10]

Scoring

The Series 66 contains 100 scored multiple-choice questions. However, NASAA publications give inconsistent information regarding how the Series 66 is scored. One publication claims that candidates must score 75 of the 100 questions correctly in order to pass the examination,[11] while another publication claims that because parts of the Series 66 exam are weighted differently, your overall score does not determine whether you pass or fail.[3] In either case, guessing does not appear to be penalized.

The NASAA does not appear to publish any official pass rate statistics or any further information on how the Series 66 is scored.

Answers to Sample Questions

1;A 2;A 3;B 4;B 5;C 6;D

References

  1. ^ FINRA: Implementation Dates of Qualification Examinations September 1 2014
  2. ^ FINRA: NASAA Implements New Uniform Combined State Law Exam September 1 2014
  3. ^ a b c d e f g NASAA: Exam FAQs September 1 2014
  4. ^ Uniform Combined State Law Examination (Series 66) Exam Specifications and Outline September 1 2014
  5. ^ a b c d e NASAA: Series 66 Study Guide September 1 2014
  6. ^ FINRA Administered Qualification Examinations September 1 2014
  7. ^ Remote Testing Information 14 July 2014
  8. ^ Remote Testing Information 14 July 2014
  9. ^ NASAA: Series 65 & 66 Resources September 1 2014
  10. ^ FINRA Special Accommodations September 1 2014
  11. ^ NASAA: Exams September 1 2014