About the Series 65 Exam

NASAA Investment Adviser Competency Exam (Series 65)

Exam Specifications and Outline

(Last updated 1/1/2010)

I. Economic Factors and Business Information

[19 Questions (14%)]

Basic Economic Concepts

Business cycles

monetary and fiscal policy

US dollar valuation

inflation/deflation

interest rates and yield curves

economic indicators

GDP

employment indicators

trade deficit

balance of payments

CPI

Financial reporting

* financial statements
* income statement
* balance sheet
* statement of cash flow
* financial ratios
* current ratio
* quick ratio
* debt-to-equity ratio
* corporate SEC filings
* annual reports and prospectuses

Quantitative methods

* time value of money concepts
* internal rate of return (IRR)
* net present value (NPV)
* descriptive statistics
* measures of central tendency (mean, median, mode)
* range
* standard deviation
* Beta and its derivatives
* valuation ratios
* price/earnings
* price-to-book

Types of risk

* systematic risk
* market
* interest rate
* inflation
* unsystematic risk
* business
* regulatory c. political
* liquidity
* opportunity cost
* capital structure including liquidation priority

II. Investment Vehicle Characteristics

[31 Questions (24%)]
* Types and characteristics of cash and cash equivalents 3
* insured deposits
* demand deposits
* CD's
* money market instruments
* commercial paper
* Treasury bills
* Types and characteristics of fixed income securities 5
* U.S. government and agency securities
* Treasury securities
* FNMA
* TIPS
* corporate bonds
* coupon bonds
* convertible bonds
* tax implications
* bond rating
* municipal bonds
* general obligation
* revenue
* tax implications
* foreign bonds
* risks and advantages
* government debt
* corporate debt
* Brady bonds
* Methods used to determine the value of fixed income securities 3
* fixed income valuation factors
* premium
* discount
* duration
* maturity
* yield to call
* yield to maturity
* coupon
* conversion valuation
* bond ratings
* discounted cash flow
* Types and characteristics of equity securities 5
* equity interests
* common stock
* preferred stock
* convertible preferred stocks
* warrants
* ADRs
* restricted stock
* foreign stocks
* employee stock options
* incentive
* non-qualified
* shareholder rights
* voting rights
* dividends
* liquidity preferences
* antidilution
* Methods used to determine the value of equity securities 2
* fundamental analysis
* Types and characteristics of pooled investments 4
* open-end investment companies (mutual funds)
* closed-end investment companies
* unit investment trusts
* exchange traded funds
* real estate investment trusts (REITs)
* Methods used to determine the value of pooled investments 2
* net asset value
* discount/premium
* Types and characteristics of derivative securities 1
* types
* options (definition only)
* futures (definition only)
* forward contracts (definition only)
* Alternative Investments 2
* hedge funds (definition only)
* limited partnerships (definitions only)
* Insurance-based products 4
* variable annuities
* fixed annuities
* equity indexed annuities
* life insurance (e.g., whole, term, universal, variable)

III. Client Investment Recommendations and Strategies

[40 Questions (31%)]

Type of Client

* individual, sole proprietorship
* business entities
* general partnership
* limited partnership
* limited liability company
* C-corporation
* S-corporation
* trusts & estates

Client Profile

* financial goals and strategies
* current income
* retirement
* death
* disability e. time horizon
* current financial status
* cash flow
* balance sheet
* existing investments
* tax situation
* risk tolerance
* non-financial investment considerations
* values
* attitudes
* experience
* demographics

Capital Market Theory

* Capital Asset Pricing Model (CAPM)
* Modern Portfolio Theory
* Efficient Market Hypothesis
* semi-strong
* strong
* weak
* Portfolio management styles and strategies 5
* strategic asset allocation
* style
* asset class
* rebalancing
* buy/hold
* tactical asset allocation (e.g., market timing)
* active vs. passive
* growth vs. value
* income vs. capital appreciation
* Portfolio management techniques 3
* diversification
* sector rotating
* averaging
* dollar-cost
* capital goal within specified time period
* Tax Considerations 4
* individual income tax fundamentals
* capital gains
* tax basis
* alternative minimum tax
* corporate, trust, and estate income tax fundamentals
* estate and gift tax fundamentals
* Retirement plans 3
* Individual Retirement Accounts (traditional and Roth)
* traditional
* Roth
* qualified retirement plans
* pension and profit sharing
* 401(k)
* 403(b)
* 457 3. nonqualified retirement plans
* ERISA issues 3
* fiduciary issues
* investment choices
* 404(c)
* investment policy statement
* prohibited transactions
* Special types of accounts 3
* education-related
* 529s
* Coverdell
* UTMA/UGMA
* account ownership options
* joint
* pay-on-death
* tenancy in common
* Trading securities
* terminology 5
* bids
* offers
* quotes
* market, limit, or stop order
* short sale
* cash accounts, margin accounts
* principal or agency trades
* role of broker-dealers, specialists, market-makers
* exchanges and markets
* NYSE, AMEX, CBOE, regional, international
* OTC, Nasdaq
* costs of trading securities
* commissions
* markups
* spread
* Performance measures 3
* returns
* risk-adjusted
* time-weighted
* dollar-weighted
* annualized
* total
* holding period
* internal rate of return
* expected
* inflation-adjusted
* after tax
* yield
* yield-to-maturity
* current yield
* benchmark portfolios

IV. Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices

[40 Questions (31%)]
* State and Federal Securities Acts and related rules and regulations (19%)
* Regulation of Investment Advisers, including state-registered and federal covered advisers 4
* definitions
* registration/notice-filing requirements
* post-registration requirements
* Regulation of Investment Adviser Representatives 4
* definition
* registration
* Regulation of Broker-dealers 4
* definition
* registration
* post-registration requirements
* Regulation of Agents of Broker-dealers 4
* definition
* registration
* Regulations of Securities and Issuers 4
* definitions
* registration
* post-registration requirements
* exemptions
* state authority over federal covered securities
* Remedies and Administrative Provisions 4
* authority of administrator
* administrative actions
* other penalties and liabilities
* Ethical practices and fiduciary obligations (12%)
* communications with clients and prospects 4
* disclosure
* unlawful representations concerning registrations
* performance guarantees
* client contracts
* compensation 4
* fees
* commissions
* performance-based fees
* soft dollars
* disclosure of compensation
* client funds and securities 4
* custody
* discretion
* trading authorization
* prudent investor standards
* suitability
* conflicts of interest and other fiduciary issues 4
* excessive trading
* loans to and from clients
* sharing in profits and losses in a customer account
* client confidentiality e. insider trading
* selling away
* market manipulation


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