Series 66

Study Question of the Week: February 26, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 7, Series 65, and Series 66):

James cannot believe XYZ is continuing to go down. He would like to give it a little more time to recover, but would like to protect himself if it continues to fall. What type of order would James most likely enter?

Answers:

A. Buy stop

B. Sell Stop

C. Market

D. Sell limit

Correct Answer: B. Sell Stop

Rationale: A sell stop order helps an investor avoid further losses if a stock price continues to drop. A stop order triggers a sale or purchase if the stock reaches a certain price. In this case, James would place the order below the current market and if the stock price decreased to his ‘stop price’, the order would become a market order and sell his position. The order would still allow for James to potentially recover if the stock goes up. If a market order was entered, the stock would be immediately sold at the next available ask price. A sell limit order is an order to sell at a specific price. A sell limit is usually used if the seller only wants to sell if a stock goes up to a certain specified price, but it hasn’t hit that price yet.

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Study Question of the Week: February 12, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 65, and Series 66):

Carlos, age 58, is in the 25 percent marginal income tax bracket. If he takes a $10,000 distribution from his IRA to pay off credit card debt, Carlos will be subject to a total payment of:

Answers:

A. $0

B. $3,250

C. $2,500

D. $3,500

Correct Answer: D. $3,500

Rationale: Carlos will have to pay ordinary income tax of 25% on his distribution, plus a 10% penalty for early withdrawal because he is under age 59 1/2. $10,000 (distribution amount) x 35% (tax + penalty) = $3,500 total payment for both tax-and-penalty. Perhaps Carlos should look at the $1,000 he will be paying in penalty and compare that to the total anticipated interest payments he will be making on his credit card over the next year and a half.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: December 18, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 65, and Series 66):

The IRS uses the FIFO method for taxing:

Answers:

A. Withdrawals from a life insurance contract

B. Withdrawals in excess of the basis in a variable annuity contract

C. Loans from a life insurance contract

D. None of the choices listed

Correct Answer: A. Withdrawals from a life insurance contract

Rationale: Life insurance enjoys “first in, first out“ treatment from the IRS. Annuities are taxed on a LIFO basis, and money borrowed from a life insurance contract is not taxed at all.

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Testimonial Tuesday: December 10, 2013 Edition

“Thank you so much for your great study materials! I have used Kaplan in the past and this is so much better!” Continue reading

“Thank you so much for your great study materials! I have used Kaplan in the past and this is so much better! I used your study materials to get an 84% on my series 7 and an 85% on my series 66! Keep up the good work!” -Ivan Griffin, Roach, MO

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Study Question of the Week: November 27, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 65, Series 66, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 65, Series 66, and Series 79):

Given the following assumptions for stock ABC, what is its expected return using the Capital Asset Pricing Model (CAPM)? Risk Free Rate: 2%, Expected Return on general stock market: 10%, Beta: .5, Sharpe Ratio: 3.

Answers:

A. 4%

B. 6%

C. 12%

D. 2%

Correct Answer: B. 6%

Rationale: The formula for the Capital Asset Pricing Model (CAPM) is given by the following: Return on Stock = Risk Free Rate + Beta of Stock x (Return on Market – Risk Free Rate). Plugging in for Stock ABC gives Return on Stock ABC = 2% + .5 x (10% – 2%) = 6%. Note the Sharpe Ratio is not used in the CAPM formula.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: October 30, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, Series 79, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, Series 79, and Series 82):

Johnny owns several U.S. Treasury Notes, he reads in the paper that the discount rate has fallen. What can Johnny safely infer about his Treasury Notes?

Answers:

A. On the market, the price of his Treasury Notes has fallen

B. On the market, the price of his Treasury Notes has risen

C. His annual interest from the Notes will increase

D. His annual interest from the Notes will decrease

Correct Answer: B. On the market, the price of his Treasury Notes has risen

Rationale: When the discount rate falls, this suggests that interest rates in general have lowered. This will make the Treasury Notes that Johnny is holding more attractive to buyers because they paid a higher interest rate than what new Treasury Notes are paying. Thus, the price of his Treasury Notes will have risen on the secondary market because buyers are willing to pay a premium for them. The annual interest paid on Treasury Notes is fixed so it will neither increase nor decrease.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Testimonial Tuesday: October 29, 2013 Edition

“Thank you so much and special thanks to the product you put out!! I did not know about Solomon a year ago…” Continue reading

“Thank you so much and special thanks to the product you put out!! I did not know about Solomon a year ago when I took the Series 7 and I used another companies material. I did not pass the 7 first time and I was extremely nervous about the 66. However your product was wonderful and thanks to you guys I passed the 66 on my first try!!! Can’t thank you enough!!!” -Maria Raspa, Merrill Lynch, Wellesley Hills, MA

Study Question of the Week: October 23, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 65, and Series 66):

A portfolio manager is constructing a portfolio of two stocks, and wants the stocks to be as uncorrelated as possible. Which of the following correlation values is best suited to the manager’s goals?

Answers:

A. -1

B. -0.5

C. 0.1

D. 1

Correct Answer: C. 0.1

Rationale: Correlation measures the relative movement of two stocks, and is represented by values between -1 and 1. At 1, the stocks are perfectly correlated, meaning if the first stock increases by a certain percentage, the other stock increases by the exact same percentage. At -1, if the first stock increases by a certain percentage, the other decreases by that same percentage. At 0, there is no correlation, meaning stocks move independent of each other. The portfolio manager is seeking to have very little correlation, where 0 would be ideal. Since 0 is not one of the answers, we need to find the answer closest to zero, which is 0.1.

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Study Question of the Week: September 3, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 66):

Concerning municipal bonds issued by the city of Baltimore, Maryland:

Answers:

A. If you live in the state of Maryland, you will pay state tax on the interest you earn

B. If you live in the state of Virginia, you will not pay state tax on the interest you earn

C. If you live in the state of Maryland, you will pay federal capital gains tax on any profits you realize when you sell the bonds

D. If you live in the state of Virginia, you will not pay federal capital gains tax on any profits you realize when you sell the bonds

Correct Answer: C.

Rationale: Interest income earned on municipal bonds is not taxable at the federal level, and only taxable at the state level outside the state of their issuance. Capital gains realized upon the sale of such bonds are subject to capital gains tax regardless of the taxpayer’s state of residence.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: August 20, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 65 and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 65 and Series 66):

Over a five year period, the annual returns on a particular investment were 15%, -10%, -5%, 10%, 10%. What is the most appropriate measure of central tendency for this investment?

Answers:

A. arithmetic mean

B. geometric mean

C. median

D. mode

Correct Answer: B. geometric mean

Rationale: Central tendency is a single value that summarizes a set of scores. The geometric mean is the most accurate measure of central tendency for a set of returns because the returns for each year on an investment are not independent of one another. Each year your total capital is shrinking or growing depending on the performance of the previous year, so that a 10% increase one year may be different than a 10% increase in another year. The arithmetic average does not account for this fact. The geometric mean does account for this, and thus gives the investor a truer representation of the central tendency of their returns.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.