Series 66 Exam Practice Questions

Series 66 Test Questions
Series 66 Exam Questions

Below you will find some free Series 66 Exam practice questions. In order to for a candidate to be registered with the state, the candidate must also have successfully completed the co-requisite exams. The co-requisite exams for the Series 66 are the SIE Exam and the Series 7 Top-Off Exam. Anyway, the Series 66 practice questions below will give you an idea of the types of questions you will see when taking the real exam. At the end of the practice test, you’ll find an answer key. Good luck…

10 Series 66 Practice Questions

1) An investment adviser receives an order from a client to sell 10,000 shares of CDE. The adviser believes that CDE will be a suitable investment for an institutional client. The adviser receives permission from the institution to execute the order. When executing the trade, the adviser charges fees to both clients. Which of the following is true?

A. The adviser executed an illegal transaction since one of the clients involved is a public customer
B. The adviser acted illegally because of charging fees to both clients
C. The trade is legal as long as the adviser discloses to both clients that it is acting as a broker and receives written permission from both clients
D. The trade is legal as long as one of the clients involved is an institutional client

2) According to the NASAA, an adviser would need discretionary authority to decide which of the following factors of a trade for a client?

I. The security to be traded
II. Whether to buy or sell a security
III. The time to execute an order
IV. The amount of shares to be traded

A. I and III
B. II and IV
C. I, II, and IV
D. I, II, III, and IV

3) Which of the following investments provides the greatest real rate of return?

A. A bond yielding 8% when the inflation rate is 3%
B. A bond yielding 11% when the inflation rate is 7%
C. A bond yielding 9% when the inflation rate is 5%
D. A bond yielding 6% when the inflation rate is 2%

4) Which of the following clauses may not be included in an investment advisory contract?

A. The adviser will charge a 1% semi-annual fee based on the value of the account
B. The adviser will charge a .50% additional fee based on the quarterly appreciation of the account
C. If there is a change in management of the advisory firm, the adviser will notify clients of the change promptly
D. The contract may not be assigned to anyone else without written permission of the client

5) An adviser has a client whose main objective is preservation of capital. The adviser recommends to the client to invest in mutual funds. However, the client explains that he is concerned about the safety of mutual funds. The adviser explains that all securities are regulated by the SEC and state governments. Which of the following is true?

A. This is a misleading statement since mutual funds do not have to be registered with states
B. This is a misleading statement since the SEC and states do not regulate the safety of investments
C. This is not a misleading statement since the SEC and states regulate securities trading
D. This is not a misleading statement since mutual funds are suitable for preservation of capital

When you’re taking tests (whether practice or real) like the Series 66, pay special attention to key words which can change the answer such as EXCEPT and NOT.

Empire Stockbroker Training Institute’s Series 66 Online Testing Program.

6) All of the following are subject to SEC regulation under the Securities Act of 1934 EXCEPT :

A. Broker-dealers
B. Agents
D. Banks

7) An adviser recommends to an investor to buy Treasury securities since they have no credit, capital, or market risk. Which of the following is true regarding this statement?

A. This statement is misleading since any security is subject to the risk of a market downturn
B. This statement is misleading since the Federal taxation of interest takes away from the investor’s rate of return
C. This statement is not misleading since Government securities are considered to be the safest of all securities
D. This statement is not misleading since Treasuries are direct obligations of the US Government

8) A client who earns substantial income and has a low amount of debt signs a contract with an investment adviser. The client tells the adviser that he has a low risk tolerance and wishes to invest in CDs and money market funds. Which of the following is true?

A. The adviser should invest the client’s money into equities since the client is financially capable of handling the risk
B. The adviser should not try to convince the investor to invest in equities
C. The adviser should not recommend conservative strategies to the client
D. The adviser should take the client’s risk tolerance into consideration when making recommendations

9) Which of the following rate of return calculations factors in the volatility of the security?

A. Real rate of return
B. Internal rate of return
C. Annualized return
D. Risk adjusted return

10) If an adviser recommends to a client to execute trades through a third party adviser for a wrap fee, which of the following does not need to be disclosed?

A. The client’s adviser may be paid a referral fee by the other adviser
B. The amount of the fee might be larger than normal since a third party adviser is involved in executing trades for the client
C. The amount of compensation that the client’s adviser receives from the third party adviser for the referral
D. The fact that the client’s adviser has financial incentive to recommend programs offered by the other adviser

Answer Key: 1) C 2) C 3) A 4) B 5) B 6) D 7) A 8) D 9) D 10) C

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Above is just a sampling of Series 66 Exam practice questions. When purchasing our Series 66 Course Textbook, you will not only get the correct answers, but also detailed explanations. All books were created by Steven M. Rice and Rueben Martinez


Series 66 Course Textbook

The Empire Series 66 Course Textbook with chapter exams with explanations, 4 final exams with explanations, and a glossary of Series 66 terms.


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Series 66 Exam Outline

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