Series 65 Exam Prep UPDATED ACTUAL
Exam Questions and CORRECT Answers
Portfolio Allocation - CORRECT ANSWER - Distribution of assets in an investment
portfolio
Volatility - CORRECT ANSWER - Measure of the degree of variation in the price or
value of a financial instrument
Beta - CORRECT ANSWER - Measure of a stock's sensitivity to market movements
S&P - CORRECT ANSWER - Stock market index that measures the performance of 500
large companies listed on stock exchanges in the United States
Internal Rate of Return - CORRECT ANSWER - Method of computing long-term returns
that takes into consideration time value of money
Arithmetic Mean - CORRECT ANSWER - Average rate of return calculated by summing
the returns over a period and dividing by the number of periods
Geometric Mean - CORRECT ANSWER - Average rate of return calculated by taking the
nth root of the product of the returns over a period
Efficient Market Hypothesis - CORRECT ANSWER - Theory that states that all relevant
information is already reflected in the price of a security
Efficient Portfolio Set - CORRECT ANSWER - Set of portfolios that offer the maximum
expected return for a given level of risk
, Treasury Bond - CORRECT ANSWER - Debt security issued by the U.S. Department of
the Treasury with a fixed interest rate and maturity date
Nominal Yield - CORRECT ANSWER - Stated interest rate on a bond
Bond Maturity - CORRECT ANSWER - Date when a bond is due to be repaid
Call Option - CORRECT ANSWER - Contract that gives the holder the right to buy a
specified quantity of an underlying asset at a predetermined price within a specified time period
Put Option - CORRECT ANSWER - Contract that gives the holder the right to sell a
specified quantity of an underlying asset at a predetermined price within a specified time period
Market Maker - CORRECT ANSWER - Broker/dealer who stands ready to buy or sell a
specific stock in the over-the-counter market
Diversification - CORRECT ANSWER - Strategy of spreading investments across
different assets to reduce risk
Efficient Frontier - CORRECT ANSWER - Set of portfolios that offer the maximum
expected return for a given level of risk
Treasury Bond - CORRECT ANSWER - Debt security issued by the U.S. Department of
the Treasury with a fixed interest rate and maturity date
Nominal Yield - CORRECT ANSWER - Stated interest rate on a bond
Bond Maturity - CORRECT ANSWER - Date when a bond is due to be repaid
Exam Questions and CORRECT Answers
Portfolio Allocation - CORRECT ANSWER - Distribution of assets in an investment
portfolio
Volatility - CORRECT ANSWER - Measure of the degree of variation in the price or
value of a financial instrument
Beta - CORRECT ANSWER - Measure of a stock's sensitivity to market movements
S&P - CORRECT ANSWER - Stock market index that measures the performance of 500
large companies listed on stock exchanges in the United States
Internal Rate of Return - CORRECT ANSWER - Method of computing long-term returns
that takes into consideration time value of money
Arithmetic Mean - CORRECT ANSWER - Average rate of return calculated by summing
the returns over a period and dividing by the number of periods
Geometric Mean - CORRECT ANSWER - Average rate of return calculated by taking the
nth root of the product of the returns over a period
Efficient Market Hypothesis - CORRECT ANSWER - Theory that states that all relevant
information is already reflected in the price of a security
Efficient Portfolio Set - CORRECT ANSWER - Set of portfolios that offer the maximum
expected return for a given level of risk
, Treasury Bond - CORRECT ANSWER - Debt security issued by the U.S. Department of
the Treasury with a fixed interest rate and maturity date
Nominal Yield - CORRECT ANSWER - Stated interest rate on a bond
Bond Maturity - CORRECT ANSWER - Date when a bond is due to be repaid
Call Option - CORRECT ANSWER - Contract that gives the holder the right to buy a
specified quantity of an underlying asset at a predetermined price within a specified time period
Put Option - CORRECT ANSWER - Contract that gives the holder the right to sell a
specified quantity of an underlying asset at a predetermined price within a specified time period
Market Maker - CORRECT ANSWER - Broker/dealer who stands ready to buy or sell a
specific stock in the over-the-counter market
Diversification - CORRECT ANSWER - Strategy of spreading investments across
different assets to reduce risk
Efficient Frontier - CORRECT ANSWER - Set of portfolios that offer the maximum
expected return for a given level of risk
Treasury Bond - CORRECT ANSWER - Debt security issued by the U.S. Department of
the Treasury with a fixed interest rate and maturity date
Nominal Yield - CORRECT ANSWER - Stated interest rate on a bond
Bond Maturity - CORRECT ANSWER - Date when a bond is due to be repaid
