Series 65® Exam 2026 Latest Comprehensive Study
Guide with Practice Questions Investment Adviser
Review, Detailed Rationales, Verified Answers,
Success Preparation Workbook
2026 Exam Content Outline (Four Major Sections)
Section Topic Area Weight
I Economic Factors and Business Information 15%
II Investment Vehicle Characteristics 25%
III Client Investment Recommendations and Strategies 30%
Laws, Regulations, and Guidelines (incl. Prohibition on
IV 30%
Unethical Business Practices)
Key 2026 Updates to Be Aware Of:
• SEC Marketing Rule (Rule 206(4)-1) : Mandatory since November 4, 2022
— testimonial and endorsement disclosure framework
• 2024 Reg S-P Amendments (Release IA-6604, adopted May 16, 2024):
Staggered compliance deadlines — December 3, 2025 for larger
advisers, June 3, 2026 for smaller ones
• SECURE 2.0 Retirement Provisions: 2026 Roth catch-up requirement and
529-to-Roth rollover
• Form CRS: Enforcement landscape built out through 2024 and 2025
• IA Fiduciary Standard vs. Reg BI vs. FINRA Suitability: Comparison
frequently tested in scenario questions
, • Question Format: Multiple Choice (four answer choices)
• Answer Key: The correct answer is bolded and highlighted in each
rationale.
• Tip: Cover the rationale and try to answer each question independently first.
SECTION 1: ECONOMIC FACTORS AND BUSINESS INFORMATION
(Questions 1–15)
1. Which of the following is the BEST indicator of the overall direction of the
economy over the long term?
A) The consumer price index (CPI)
B) Gross domestic product (GDP) growth
C) The federal funds rate
D) The unemployment rate
Rationale:
• A is incorrect: CPI measures inflation, not overall economic direction.
• B is correct: Gross Domestic Product (GDP) growth is the broadest
measure of economic activity and is the best long-term indicator of the
economy's overall direction.
• C is incorrect: The federal funds rate is a monetary policy tool that
influences the economy but is not itself an indicator of economic direction.
• D is incorrect: The unemployment rate is a lagging indicator that confirms
economic trends but does not predict direction.
2. During a period of expansionary monetary policy, the Federal Reserve is
MOST likely to:
A) Increase the discount rate
B) Decrease the federal funds rate
,C) Increase reserve requirements
D) Sell Treasury securities in open market operations
Rationale:
• A is incorrect: Increasing the discount rate is a contractionary monetary
policy action.
• B is correct: Expansionary monetary policy involves decreasing the
federal funds rate, which lowers borrowing costs and stimulates economic
activity.
• C is incorrect: Increasing reserve requirements is contractionary.
• D is incorrect: Selling Treasury securities is contractionary (it removes
money from the banking system).
3. Which of the following is a LEADING economic indicator?
A) The unemployment rate
B) Average weekly initial claims for unemployment insurance
C) Consumer price index
D) Gross domestic product
Rationale:
• A is incorrect: The unemployment rate is a lagging indicator.
• B is correct: Average weekly initial claims for unemployment
insurance is a leading indicator — it tends to change before the economy
as a whole changes.
• C is incorrect: CPI is a lagging indicator.
• D is incorrect: GDP is a coincident indicator.
4. A bond with a duration of 8 years will experience approximately what
percentage price change if interest rates increase by 1%?
A) +8%
B) −8%
, C) −1%
D) +1%
Rationale:
• A is incorrect: An increase in interest rates causes bond prices to decrease.
• B is correct: Duration measures price sensitivity to interest rate changes. A
bond with a duration of 8 will lose approximately 8% of its value for a 1%
increase in interest rates (modified duration × change in yield).
• C is incorrect: 1% would be the change in yield, not the price impact.
• D is incorrect: Prices decrease, not increase, when rates rise.
5. Which of the following BEST describes the relationship between bond
prices and interest rates?
A) They move in opposite directions
B) They move in the same direction
C) There is no relationship
D) The relationship depends on the bond's credit rating
Rationale:
• A is correct: Bond prices and interest rates have an inverse relationship —
when interest rates rise, bond prices fall, and vice versa.
• B is incorrect: This describes the relationship between bond yields and
interest rates, not prices.
• C is incorrect: There is a well-established inverse relationship.
• D is incorrect: While credit ratings affect yield spreads, the inverse
relationship applies to all bonds.
6. A company has a debt-to-equity ratio of 2.0. This means that:
A) The company has $2.00 of debt for every $1.00 of equity
B) The company has $1.00 of debt for every $2.00 of equity
C) The company has $2.00 of equity for every $1.00 of debt
D) The company has no debt
Guide with Practice Questions Investment Adviser
Review, Detailed Rationales, Verified Answers,
Success Preparation Workbook
2026 Exam Content Outline (Four Major Sections)
Section Topic Area Weight
I Economic Factors and Business Information 15%
II Investment Vehicle Characteristics 25%
III Client Investment Recommendations and Strategies 30%
Laws, Regulations, and Guidelines (incl. Prohibition on
IV 30%
Unethical Business Practices)
Key 2026 Updates to Be Aware Of:
• SEC Marketing Rule (Rule 206(4)-1) : Mandatory since November 4, 2022
— testimonial and endorsement disclosure framework
• 2024 Reg S-P Amendments (Release IA-6604, adopted May 16, 2024):
Staggered compliance deadlines — December 3, 2025 for larger
advisers, June 3, 2026 for smaller ones
• SECURE 2.0 Retirement Provisions: 2026 Roth catch-up requirement and
529-to-Roth rollover
• Form CRS: Enforcement landscape built out through 2024 and 2025
• IA Fiduciary Standard vs. Reg BI vs. FINRA Suitability: Comparison
frequently tested in scenario questions
, • Question Format: Multiple Choice (four answer choices)
• Answer Key: The correct answer is bolded and highlighted in each
rationale.
• Tip: Cover the rationale and try to answer each question independently first.
SECTION 1: ECONOMIC FACTORS AND BUSINESS INFORMATION
(Questions 1–15)
1. Which of the following is the BEST indicator of the overall direction of the
economy over the long term?
A) The consumer price index (CPI)
B) Gross domestic product (GDP) growth
C) The federal funds rate
D) The unemployment rate
Rationale:
• A is incorrect: CPI measures inflation, not overall economic direction.
• B is correct: Gross Domestic Product (GDP) growth is the broadest
measure of economic activity and is the best long-term indicator of the
economy's overall direction.
• C is incorrect: The federal funds rate is a monetary policy tool that
influences the economy but is not itself an indicator of economic direction.
• D is incorrect: The unemployment rate is a lagging indicator that confirms
economic trends but does not predict direction.
2. During a period of expansionary monetary policy, the Federal Reserve is
MOST likely to:
A) Increase the discount rate
B) Decrease the federal funds rate
,C) Increase reserve requirements
D) Sell Treasury securities in open market operations
Rationale:
• A is incorrect: Increasing the discount rate is a contractionary monetary
policy action.
• B is correct: Expansionary monetary policy involves decreasing the
federal funds rate, which lowers borrowing costs and stimulates economic
activity.
• C is incorrect: Increasing reserve requirements is contractionary.
• D is incorrect: Selling Treasury securities is contractionary (it removes
money from the banking system).
3. Which of the following is a LEADING economic indicator?
A) The unemployment rate
B) Average weekly initial claims for unemployment insurance
C) Consumer price index
D) Gross domestic product
Rationale:
• A is incorrect: The unemployment rate is a lagging indicator.
• B is correct: Average weekly initial claims for unemployment
insurance is a leading indicator — it tends to change before the economy
as a whole changes.
• C is incorrect: CPI is a lagging indicator.
• D is incorrect: GDP is a coincident indicator.
4. A bond with a duration of 8 years will experience approximately what
percentage price change if interest rates increase by 1%?
A) +8%
B) −8%
, C) −1%
D) +1%
Rationale:
• A is incorrect: An increase in interest rates causes bond prices to decrease.
• B is correct: Duration measures price sensitivity to interest rate changes. A
bond with a duration of 8 will lose approximately 8% of its value for a 1%
increase in interest rates (modified duration × change in yield).
• C is incorrect: 1% would be the change in yield, not the price impact.
• D is incorrect: Prices decrease, not increase, when rates rise.
5. Which of the following BEST describes the relationship between bond
prices and interest rates?
A) They move in opposite directions
B) They move in the same direction
C) There is no relationship
D) The relationship depends on the bond's credit rating
Rationale:
• A is correct: Bond prices and interest rates have an inverse relationship —
when interest rates rise, bond prices fall, and vice versa.
• B is incorrect: This describes the relationship between bond yields and
interest rates, not prices.
• C is incorrect: There is a well-established inverse relationship.
• D is incorrect: While credit ratings affect yield spreads, the inverse
relationship applies to all bonds.
6. A company has a debt-to-equity ratio of 2.0. This means that:
A) The company has $2.00 of debt for every $1.00 of equity
B) The company has $1.00 of debt for every $2.00 of equity
C) The company has $2.00 of equity for every $1.00 of debt
D) The company has no debt
