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SERIES 66 EXAM STUDY GUIDE
2025/2026 ACCURATE QUESTIONS AND
VERIFIED CORRECT SOLUTIONS WITH
RATIONALES || 100% GUARANTEED PASS
<RECENT VERSION>
IRR - (ANSWER)Discount rate that makes the FV of an investment equal to PV
- Not practical for common stock due to uneven cash flow and no maturity date or
price
- Method of computing long-term returns that takes into consideration time value
of money
- YTM of a bond = IRR
NPV - (ANSWER)Difference between an investments PV and CMV
- Used to evaluate a clients investment in any investment vehicle with a projected
income stream
- Adviser would project the cash flows from the investment and then discount
them to their PV at the investors Required ROR
- If the PV is $90, there is a negative PV of $10 ($100-$90 = $10)
IRR vs NPV - (ANSWER)IRR expressed as a percentage
,2
NPV expressed as a dollar amount
Arithmetic Mean - (ANSWER)Sum of variables divided by number of occurrences
The term "mean" will always refer to the arithmetic mean
Geometric Mean - (ANSWER)Multiply a set of numbers and take nth root of them
Median - (ANSWER)Midpoint of distribution
Mode - (ANSWER)Most common value in a distribution
Range - (ANSWER)Difference between highest and lowest values
Standard Deviation - (ANSWER)Measure of volatility of returns computed by
using historical performance data
- Higher StDev means the returns are expected to deviate more from average
return
- StDev includes both systematic and unsystematic risk (total risk)
Alpha - (ANSWER)Performance of a portfolio or stock compared to expected
market return
, 3
- Comparing performance after eliminating risk-free rate
Beta - (ANSWER)Measures variability with market movement
Sharpe Ratio - (ANSWER)Risk-adjusted return per unit of risk taken
- Overall Return of a Portfolio - Risk Free Rate = Risk premium/StDev of Portfolio
- Higher the ratio, the better the return per unit of risk taken
Correlation Coefficient - (ANSWER)Measure of how securities move together
- +1 means perfectly correlated
- -1 means inversely correlated
Financial Ratios - (ANSWER)Tools to analyze company's financial performance
What is the Current Ratio? - (ANSWER)Current Assets/Current Liabilities.
- Higher ratio = more liquid.
SERIES 66 EXAM STUDY GUIDE
2025/2026 ACCURATE QUESTIONS AND
VERIFIED CORRECT SOLUTIONS WITH
RATIONALES || 100% GUARANTEED PASS
<RECENT VERSION>
IRR - (ANSWER)Discount rate that makes the FV of an investment equal to PV
- Not practical for common stock due to uneven cash flow and no maturity date or
price
- Method of computing long-term returns that takes into consideration time value
of money
- YTM of a bond = IRR
NPV - (ANSWER)Difference between an investments PV and CMV
- Used to evaluate a clients investment in any investment vehicle with a projected
income stream
- Adviser would project the cash flows from the investment and then discount
them to their PV at the investors Required ROR
- If the PV is $90, there is a negative PV of $10 ($100-$90 = $10)
IRR vs NPV - (ANSWER)IRR expressed as a percentage
,2
NPV expressed as a dollar amount
Arithmetic Mean - (ANSWER)Sum of variables divided by number of occurrences
The term "mean" will always refer to the arithmetic mean
Geometric Mean - (ANSWER)Multiply a set of numbers and take nth root of them
Median - (ANSWER)Midpoint of distribution
Mode - (ANSWER)Most common value in a distribution
Range - (ANSWER)Difference between highest and lowest values
Standard Deviation - (ANSWER)Measure of volatility of returns computed by
using historical performance data
- Higher StDev means the returns are expected to deviate more from average
return
- StDev includes both systematic and unsystematic risk (total risk)
Alpha - (ANSWER)Performance of a portfolio or stock compared to expected
market return
, 3
- Comparing performance after eliminating risk-free rate
Beta - (ANSWER)Measures variability with market movement
Sharpe Ratio - (ANSWER)Risk-adjusted return per unit of risk taken
- Overall Return of a Portfolio - Risk Free Rate = Risk premium/StDev of Portfolio
- Higher the ratio, the better the return per unit of risk taken
Correlation Coefficient - (ANSWER)Measure of how securities move together
- +1 means perfectly correlated
- -1 means inversely correlated
Financial Ratios - (ANSWER)Tools to analyze company's financial performance
What is the Current Ratio? - (ANSWER)Current Assets/Current Liabilities.
- Higher ratio = more liquid.
