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FINRA SERIES 66 Exam (page: 2)
FINRA Series66 (Series66) NASD Series 66
Updated on: 12-Feb-2026

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SERIES 66 PDF 251 Questions

The general investing public is under the opinion that today''s new tech stock is going to take off and that its high price/earnings ratio is insignificant. Mary invests with the philosophy that the new tech stock is highly over-valued and that when the stock price is lower and the company begins to show earnings, it may represent a good buy. This is known as:

  1. Efficient frontier
  2. Contrarian investing
  3. Tactical asset allocation
  4. Modern Portfolio Theory

Answer(s): B

Explanation:

Mary invests with a contrarian investment strategy, a style that does not follow public opinion and market trends. Contrarian style investing generally places value on solid companies with low P/E ratios



Stanley Pawlowski is the administrator of his company pension 401(k) plan. He''s just hired Dennis Blaze as the investment advisor who will also share in fiduciary responsibility. Under the Employee Retirement Income Security Act (ERISA), which one of the following documents must Stanley and Dennis keep on file?

  1. The plan''s performance reports
  2. An investment policy statement
  3. An official statement
  4. A contract of qualified plan participants

Answer(s): B

Explanation:

An investment policy statement describes the plan's investment strategy as well as long- term plan goals, investment philosophy, risk tolerance, time horizons, rate of return expectations and preferred asset classes. An investment advisor is bound by law and fiduciary responsibility to follow this blueprint of the investment plan



Which of the following would endure the most negative impact based on rising inflation:

  1. Gold
  2. Real Estate
  3. ''AAA'' Bonds
  4. Blue Chip Stocks

Answer(s): C

Explanation:

Bonds show a far greater degree of vulnerability during inflationary times than do the other choices, which, historically, have fared well when the cost of goods and services has increased. Bondholders incur rising interest rates, which drive down the value of their investments. Furthermore, the interest paid on bonds also loses purchasing power during times of inflation



The formula Pn=P0(1+r)n is used to calculate:

  1. Value of principal
  2. Time value of money
  3. Future value of money
  4. Internal rate of return

Answer(s): C

Explanation:

The formula for future value of money projects what an investment will be worth at some given point in the future. The original principal amount(P0), interest rate (r) and the number of years for the interest to compound (Pn) are all important factors in the calculation



Which of the following investment vehicles would be best suited for someone with an aggressive risk tolerance?

  1. Small company fund
  2. T-Bills
  3. Money market CD''s
  4. ''AAA'' corporate bonds

Answer(s): A

Explanation:

An investor with an aggressive risk tolerance is comfortable with the rise and fall of markets and is willing to exchange potentially higher profits with a higher degree of risk. Small company funds, known as small-cap funds, are typically considered riskier because of their size and may often be start-ups



Sally''s long-time partner, Gene, has just passed away and Sally seeks advice from her trusted financial advisor, Lyn.
Which of the following is NOT true regarding estates?

  1. Executors are fiduciaries
  2. Estates are meant to be short term
  3. Estates include the total assets and liabilities of the deceased, along with all types of property, real and personal, tangible and intangible
  4. Without a will, the courts appoint an executor to distribute assets, pay taxes and safeguard the property for the benefit of the estate''s heirs.

Answer(s): D

Explanation:

Without a will, the courts appoint an administrator to pay taxes, distribute assets and oversee the property. If this person has been named in a will, they are known as the executor. All of the other choices are correct with regard to estates



Jonathan Marks is a conservative investor and does not appreciate a great deal of risk. He likes socially-conscious companies that value diversity, health and human life. His financial advisor, Allan Reynolds, captures all of this information while conducting an interview to determine a suitable investment strategy for Jonathan''s IRA portfolio. Allan returns in one week with choices for Jonathan to consider. Allan may have missed his mark with at least one of his recommendations.
Which of these would be an inappropriate investment, considering Jonathan''s personal investment philosophy and risk tolerance?

  1. A hedge fund that invests in multicultural businesses
  2. An equities fund of organic food manufacturers
  3. A corporate bond fund that intentionally contains no tobacco companies
  4. A mutual fund consisting of socially conscious companies

Answer(s): A

Explanation:

Since Jonathan Marks has a low tolerance for risk, he would definitely want to avoid investing in a hedge fund, no matter what type of businesses the fund invests in. Hedge funds come with a very high degree of risk in exchange for a potentially high return. All the other options shown would respect Mr. Marks' philosophical views and would also be appropriate for his retirement plan



The measure of return for the yield to maturity of a bond is:

  1. Par x $1,000
  2. Total return
  3. The internal rate of return
  4. Call risk

Answer(s): C

Explanation:

When calculating an investment's future value we use the formula Pn=Po(1+r); to calculate present value, or the investment amount needed today to reach a future financial goal, we use the formula Po=Pn/(1+r)n. It is also helpful, if you have the numbers for Pn or Po,to find "r", the rate of interest on an investment. This calculation is most easily solved by a manual trial-and-error method using an electronic calculator. The resulting figure is known as the internal rate of return (IRR). A trial-and-error manual calculation is now easily solved by most electronic calculators



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