Tag: Study Tips

How to Pass the MSRB Series 50 Exam

How do you prepare for a challenging securities exam like the Series 50? Solomon shares insights about the test and how to study successfully. Continue reading

The Series 50, also known as the Municipal Advisor Representative Qualification Examination, was developed by the Municipal Securities Rulemaking Board (MSRB) to set professional standards and ensure a basic level of industry knowledge for municipal advisor representatives. Passing the Series 50 exam qualifies you to provide advice about municipal financial products to, or on behalf of, municipal entities. That means you will be able to help municipalities through the process of issuing securities and advise them on how to invest their proceeds. 

The registration category, “Municipal Advisor Representative,” was created to comply with the Dodd-Frank Act, which Congress passed in response to the 2008 financial crisis. Municipal advisor firms must have at least one individual who has passed the Series 50 in order to engage in municipal advisory activities. 

Whether you have years of professional experience, or you’re just starting out in the industry, the Series 50 can be a challenging exam and requires ample study time. Solomon recommends studying for 60 hours over a four-week period. That might seem daunting, but understanding what the test is like and how to study for it will set you on the path to being well-prepared for exam day.

About the Exam

The Series 50 exam consists of 100 scored and 10 un-scored multiple-choice questions covering the five topic areas of the MSRB Series 50 Content Outline. The 10 additional un-scored questions are ones that the exam committee is trying out. These are unidentified and are distributed randomly throughout the exam. Before the test starts, you have 30 minutes to watch a tutorial about the exam’s administration, and this time is included in the total exam time of three and one-half hours.

Series 50 exam details

Note: Scores are rounded down to the next lowest whole number (e.g. 70.9% would be a final score of 70% – not a passing score for the Series 50 exam).

Topics Covered on the Exam

The questions on the Series 50 exam cover the five major job functions of a municipal advisor representative, as determined by the MSRB:

Series 50 exam topics

The MSRB updates its exam questions regularly to reflect the most current rules and regulations. Solomon recommends that you print out the current version of the MSRB Series 50 Content Outline and use it in conjunction with the Solomon Series 50 Study Guide. The Content Outline is subject to change without notice, so make sure you have the most recent version.

Question Types on the Exam

The Series 50 exam consists of multiple-choice questions, each with four options. You will see these question structures:

Closed Stem Format:

This item type asks a question and gives four possible answers from which to choose.

Which of the following is true of the MSRB?

    1. The MSRB creates rules that govern issuers of securities.
    2. The MSRB is composed of 20 members who are knowledgeable about municipal securities.
    3. The MSRB does not have the power to enforce its own regulations.
    4. The MSRB was created by the Securities Exchange Act of 1934.
Incomplete Sentence Format:

This kind of question has an incomplete sentence followed by four options that present possible conclusions.

Advisors prohibited from engaging in municipal advisory business under the pay to play rule may qualify for an automatic exemption if:

    1. The advisor discovered the contribution within a reasonable time from the date it was made.
    2. The contribution did not exceed $250.
    3. The person who made the contribution obtained its return before the advisor discovered the contribution.
    4. The advisor has only used three automatic exceptions in the last 12 months.
“EXCEPT” Format:

This type requires you to recognize the one choice that is an exception among the four answer choices presented.

All of the following might be found in the MD&A except:

    1. A summary of the major events of the year for the municipality
    2. A comparison of the current financial year to the previous one
    3. An organizational chart of governmental employees
    4. A discussion of whether the budget was met or exceeded
Complex Multiple-Choice (“Roman Numeral”) Format:

For this question type, you see a question followed by two or more statements identified by Roman numerals. The four answer choices represent combinations of these statements. You must select the combination that best answers the question.

Which of the following are true?

    1. Municipal advisors may, under certain circumstances, act as underwriters.
    2. Underwriters may, under certain circumstances, act as municipal advisors.
    3. Municipal advisors may never act as underwriters.
    4. Underwriters may never act as municipal advisors.
    1. I and IV
    2. II and III
    3. I and II
    4. III and IV
  1.  

Answers: 1. C   2. B   3. C   4. B

For an even better idea of the possible question types you might encounter on the Series 50 exam, try Solomon Exam Prep’s free Series 50 Sample Quiz.

Taking the Series 50 Exam

The Series 50 exam is administered by FINRA and must be taken at a Prometric test center. Like all qualifying exams in the securities industry, the Series 50 is closed book, which means you are not permitted to bring anything into the exam. The test center will provide you with any materials needed to complete the exam. For instance, the test center will likely provide a whiteboard with markers or scratch paper and a pencil, as well as a basic electronic calculator. 

The inspection and sign-in requirements at test centers are stringent, so plan to arrive at least 30 minutes before your scheduled test appointment. Due to COVID-19, you are required to wear a mask the whole time you are at the test center. Solomon recommends taking timed practice exams in the Series 50 Exam Simulator while wearing a mask to get used to this added discomfort.

Test-Taking Tips

When taking the exam, it helps to keep some test-taking strategies in mind. Try not to spend too long on one question—this may cause you to run out of time and not get to other questions you know. If you don’t know the answer to a question, guess at the answer and “flag” it. There is no penalty for guessing, so it is beneficial to answer every question.
 
After you have finished all the questions, you can come back to any flagged questions. Not only does this strategy allow you to efficiently answer the ones you know, but it can also help because you might learn something later in the exam that may help you answer an earlier question. Just remember to save enough time to return to the questions you didn’t answer. However, it is not a good idea to simply skip all of the difficult questions with the intention of answering them later. You should make a serious effort to answer each question before moving on to the next one, as your thoughts are often clearer early on in the exam-taking process than they will be later.

How to Study for the Series 50 Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon Study Guide, carefully. The Series 50 is a knowledge test, not an IQ test. Many students read the Study Guide two or three times before taking the exam. To increase your ability to focus while reading, or as an alternative to reading, listen to the Series 50 Audiobook, which is a word-for-word reading of the Study Guide.
    • Answer practice questions in the Exam Simulator. When you’re done with a chapter in the Study Guide, take 4–6 chapter quizzes in the Solomon Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales. When you’re finished reading the entire Study Guide, review your handwritten notes once more. Then, and only then, start taking full practice exams in the Exam Simulator. Aim to pass at least six full practice exams and try to get your average score to at least an 80%; when you reach that point, you are probably ready to sit for the Series 50 exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the Study Guide, take handwritten notes and review your notes every day for 10 to 15 minutes. Studies show that the act of taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another powerful and proven method to reinforce memory and strengthen learning.
    • Research. Research anything you do not understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they do not understand get a deeper understanding of the subject matter and are much more likely to pass.
    • Become the teacher. Studies show that explaining what you are learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions. If you don’t have anyone, explain it to yourself. Studies show that helps almost as much as explaining to an actual person (see Solomon’s previous blog post to learn more about this strategy!).
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Series 50 Resources folder in your Solomon student account has helpful study tools, including documents that summarize important exam concepts. There is also a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Watch the Video Lecture. This provides a helpful review of the key concepts in each chapter after reading the Solomon Study Guide. Take notes to help yourself stay focused.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you are studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep during the period when you are studying. Sleep consolidates learning into memory, studies show. Be good to yourself while you are studying for the Series 50: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the MSRB Series 50 Exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming a municipal advisor representative.

Explore all Solomon Exam Prep Series 50 study materials, including the Study Guide, Exam Simulator, Audiobook, and Video Lecture.

Looking for more support as you prepare for the Series 50 exam? Solomon offers Live Web Classes for the Series 50. 

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Interview: How Pennie Kincade Passed Three Securities Licensing Exams

Do you need to pass the SIE, Series 7, Series 66, or another FINRA or NASAA exam? Hear one student’s experience preparing for and taking her securities exams. Continue reading

There are many career options to choose from in the financial services industry, such as stockbroker, investment banker, financial analyst, or financial advisor. Whether you’re aiming for a job on Wall Street or off, you will probably need to pass a securities licensing exam or two (or three) to be permitted to work in your chosen role. To reach her career goals, Solomon customer Pennie Kincade, Financial Advisor at Raymond James Financial Services, decided to take the FINRA Securities Industry Essentials (SIE) and Series 7, and the NASAA Series 66 exams. Pennie recently shared her experience studying for and passing her exams.

“From passing the exams, I have been able to further my career and truly enjoy coming to work every day. It’s been a privilege to partner with my clients and plan for their retirement.”

Pennie Kincade

Solomon Exam Prep: What led you to take the SIE, Series 7, and Series 66?

Pennie Kincade: When I started working in the financial services industry, I found my passion helping individuals and businesses reach their financial goals. I wanted to take this a step further by helping with their long-term goals, wealth management strategies, business succession planning, and retirement planning. With the SIE, Series 7 and 66, now I can follow my dream of assisting clients with wealth management strategies.

Solomon Exam Prep: Out of the exams you passed, which one did you find the most challenging and why?

Pennie Kincade: The Series 7 was the most challenging and the longest exam. It was helpful to have Solomon Exam Prep available to answer my questions and breakdown concepts into simple terms. They gave me confidence to push through and not give up.

Solomon Exam Prep: How did you approach studying for your exams?

Pennie Kincade: When studying for each exam, it was important to read each chapter and take a chapter exam at the end. Regardless of my scores, I continued reading through, taking an exam and then I started taking half exams once or twice a week. The questions I missed, I wrote down and referred back to for review. I reread my notes and reviewed each chapter on sections I scored low in. Once my scores were in the 80s, I moved onto a full exam once a week. Making note cards and writing out the questions I missed were helpful to review later. Two weeks before the exam, I made a sheet with notes to review each day with definitions, formulas or calculations.

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share?  

Pennie Kincade: I completed my exams at the testing center. Before each exam, I would arrive an hour and a half early. During this time, I would have a small snack and drink some water. Then I reviewed my note cards and one page cram sheet. When I was able to write down notes during the exam, I wrote down everything I could remember from my cram sheet since it was fresh in my mind. I found this helpful to refer back to when I was getting a little anxious. It helped me stay focused and maintain confidence.

“It was helpful to have Solomon Exam Prep available to answer my questions and breakdown concepts into simple terms. They gave me confidence to push through and not give up.”

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Pennie Kincade: Give yourself enough time to study and know when you need a break. I read my notes out loud, while recording my voice and listened to them on the way to work. The chapters I had a difficult time remembering I would read the section before bed and touch on it the next morning. If I felt I had information overload, I would get up for a snack and take a 15-minute break.  

Solomon Exam Prep: How has passing these exams affected your work and your career?

Pennie Kincade: From passing the exams, I have been able to further my career and truly enjoy coming to work every day. It’s been a privilege to partner with my clients and plan for their retirement.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 7, and Series 66.

Interview: How Alec Orudjev Passed Four Securities Licensing Exams

What does it take to pass securities licensing exams like the SIE, Series 24, Series 63, and Series 79? Read about one student’s approach to success. Continue reading

No one said career changes are easy, and when they involve taking several difficult securities licensing exams, the challenge is real. Having an effective study system is an important part of passing securities licensing exams, and hearing about others’ strategies can help you develop a system that works for you. Solomon Exam Prep recently interviewed Alec Orudjev, General Counsel at FT Global Capital, about passing the SIE, Series 24, Series 63, and Series 79 exams (in three months!). Alec shares valuable insights into his study process and how he utilizes Solomon materials to achieve success.

“… the Solomon study materials are the best and the most comprehensive (notes, resources, simulated exam questions, etc.) in their class, in my view.“

Photo of Alec Orudjev

Alec Orudjev

Solomon Exam Prep: What motivated you to pursue multiple securities licenses?

Alec Orudjev: After about two decades of being an attorney in private practice, I decided to change my career path and accepted an in-house legal counsel position earlier in the year. As a condition of such change, I needed to secure certain FINRA licenses.

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Alec Orudjev: I have passed the SIE, Series 79, 63 and 24 tests, and am currently studying for the Series 7 exam. While some of this sequence is dictated by FINRA rules, etc., a great deal of it is a matter of personal planning. Given the overlapping nature of the substance of these tests, I thought it would be helpful to plan the sequence to benefit from common points/concepts across different tested areas. Basically, I focused on the end objective and reviewed the substance of each test to line them up so as to utilize my time most efficiently and effectively.

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Alec Orudjev: Looking back, I think the Series 24 exam commanded most of my study time and attention. I think the volume of what was to be covered and the overall fatigue of having to study and pass three FINRA exams in a 2 ½ month period both made this test preparation more difficult than it would or should have been. It is a very saturated, broad themed exam that requires a lot of focus and attention.

Solomon Exam Prep: How did you approach studying for your exams?  

Alec Orudjev: My approach included: (i) outlining, and (ii) attending Solomon live classes and utilizing exam simulators. With respect to the first element, I approached all my exam preparations the way I did my law school exams – by first preparing thorough outlines of the reading materials. I would start by reading the Solomon preparation materials, actively engaging them and highlighting key points, concepts and examples. Next, I would transfer (literally and figuratively) those notes into an outline of my own, condensing the reading materials down to their bare essence. For example, five chapters of the Series 24 prep book (about 500 pages) were condensed to a 50-page outline (10:1 ratio or so) which, then, I used in reviewing in preparation for the test. Needless to say, one’s outline is as good as one’s effort and the quality of the underlying study materials. On the latter point – the Solomon study materials are the best and the most comprehensive (notes, resources, simulated exam questions, etc.) in their class, in my view. While this outlining approach seems like a lot of work, it is. However, it has worked for me for years and I do strongly recommend this approach to all.

With respect to the second element of my approach, I made every effort to attend live classes and utilize exam simulator questions. I will then turn to Solomon’s online exam question bank and answer those questions, noting what I got right and, more importantly, what and why I got wrong. Also, a significant part of my preparations involved participation in live classes offered by Solomon (I enrolled in the SIE and 63 sessions). You tend to get lot more out of these sessions if you review the materials ahead of time. Overall, they are terrific – the instructor is sharp and very knowledgeable, with a healthy sense of humor to get you through some rather dense and tedious parts of the material. I would highly recommend taking live sessions as they force you to focus on the totality of the study materials in five days, 3-4 hours a day – a daunting, but useful exercise.

“Studying for any difficult test is no pleasant experience … take breaks, change the nature of your mental engagement (read something else altogether, watch, take a walk, etc.) to refresh and resume your studying effort.”

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Alec Orudjev: I took all exams (4 + 1 more to go) at the ProMetric testing center in Bethesda, MD. Given the stress of test-taking, in general, I did not want to add the stress of doing it remotely, etc. The conditions at the center were superb, the staff – very friendly and helpful. I offer no new advice on how to handle this experience other than what is commonly suggested for test takers, e.g., arrive early, read test center instructions carefully and follow them to the letter, give yourself enough time to travel, relax and focus before the test, pace yourself during the test, etc. Keep in mind, however, that FINRA tests are uniquely stringent in the way they are administered, etc. So, to reiterate – read the test taking instructions closely.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Alec Orudjev: Focus on the reasons why you have undertaken this effort. Studying for any difficult test is no pleasant experience, and very few things can make that less so. However, take breaks, change the nature of your mental engagement (read something else altogether, watch, take a walk, etc.) to refresh and resume your studying effort. There will be many distractions and excuses – acknowledge and indulge to some extent, but do not lose your focus. Most importantly, be honest with yourself about how disciplined you are studying and preparing for your exams.

Solomon Exam Prep: How has passing the SIE, Series 24, Series 63, and Series 79 exams affected your work and your career?

Alec Orudjev: Certainly. Apart from the obvious, studying helped me to be a better legal professional and advisor. Understanding and internalizing a large, complex body of laws, rules and regulations governing the conduct of member firms is a daunting task indeed. These exams set a useful baseline for developing this understanding and building upon it. Take solace in this idea and keep at it.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 7, Series 24, Series 63, and Series 79.

Interview: How Andrew Nerys Passed Three Securities Licensing Exams

If you’re preparing to take a securities licensing exam, such as the SIE, Series 7, or Series 63 (or all three!), Solomon’s latest student interview is a must-read. Continue reading

If you’re interested in becoming a securities industry professional, there are many paths to follow, most of which require you to pass one or more securities licensing exams. Depending on your work and the type of employer, a common exam track is the SIE, Series 7, and Series 63 exams.

The SIE exam covers fundamentals of the securities industry and is a co-requisite to several qualification exams, including the Series 7. The Series 7 qualifies you to buy and sell the widest range of securities. The Series 63 covers the principles of state securities regulation.

Passing all three exams requires considerable effort – but it is possible! Solomon Exam Prep recently interviewed Andrew Nerys, Brokerage Operations Specialist at Cash App Investing, about passing the SIE, Series 7, and Series 63. Read about how Andrew approached studying for these exams, his experience taking exams both remotely and in-person, and how passing these securities licensing exams has benefited his career.

“Passing these exams allowed me to make an exciting transition to a new team and gave me a sense of direction for my professional future.”

Andrew Nerys

Andrew Nerys

Solomon Exam Prep: What motivated you to pursue multiple securities licenses?

Andrew Nerys: To be considered for a permanent role with my organization, it was required for me to pass the three exams I took.

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Andrew Nerys: I took the SIE, followed by the Series 7 and, lastly, the Series 63. I ultimately didn’t get much say in the order or scheduling of my exams but I did find it helpful all the same. I found that preparing for the SIE (and taking the exam) was a good introduction to the concepts and regulations of the securities industry. The Series 7 built on the concepts that were introduced in the SIE and gave me a good foundation. Taking the Series 63 last was refreshing, in a way, since I found it easier to absorb the material and there was much less to cover in preparation for the exam. I don’t think I’d change anything if I had to do it all again which, hopefully, won’t ever be the case!

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Andrew Nerys: The Series 7 definitely required the most study time. There’s a lot of material to cover and some of the concepts were challenging for me to understand. As a result, I found the need to re-read several sections and to take more of the practice tests at the end of each chapter. I also started studying each chapter by watching its corresponding Video Lecture, so it sometimes took several hours to get through one chapter’s worth of material. In total, I estimate that I spent just under 100 hours studying for that one exam.

Solomon Exam Prep: How did you approach studying for your exams?

Andrew Nerys: For each of the exams, I started by watching the chapter’s Video Lecture and taking very brief notes. Once finished with the video, I’d move on to reading the Study Guide and taking more comprehensive notes to fill in the gaps. I used a couple of wire-bound notebooks and tried to space everything out so I’d have an easy time finding any info I might be hunting for when I went back to review my notes.

I also tried to stick to the study schedules provided by Solomon as much as I could, but didn’t beat myself up if I fell a day behind. I found that I’d usually make up for it soon enough. I only made flashcards for concepts that I really struggled with, or specific equations that required memorization. Otherwise, I leaned heavily on practice tests – both for each chapter and the ones provided for exam review. The pie charts and Pass Probability™ metrics were very useful in helping me identify areas where I needed more study.

“It’s always worth remembering that passing these exams is achievable, especially on those days where it feels impossible.”

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Andrew Nerys: I had a blended experience with taking the actual exams: I took the SIE and 63 at a testing center and took the Series 7 remotely. I didn’t really have a preference for one over the other, but I’d strongly encourage anyone taking it remotely to make the space as distraction-free and free of clutter as possible. Not only did I find that helpful in keeping me focused, but it also made me feel more confident that my exam result wouldn’t be nullified for failing to meet the remote testing requirements.

The other thing to consider when deciding whether or not to take an exam remotely is that you’re not allowed to have any paper, pen, or calculator on your desk when testing remotely. That means all of the notes and calculations have to be done using your computer, which might be a disadvantage when compared to taking the exam at a testing center.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Andrew Nerys: Establish a study routine early in the process that’s easy to stick to and that keeps you regularly engaged in the material. If I took more than one day off between studying, I found it more difficult to get back into study mode.

It’s always worth remembering that passing these exams is achievable, especially on those days where it feels impossible. I also use Reddit and subscribed to a couple of Subreddits that focus on the Series 7 and other related exams. I found it really helpful to have a community that was going through the experience (or had recently been through it) to help keep me motivated and to encourage my success.

Solomon Exam Prep: How has passing the SIE, Series 7, and Series 63 exams affected your work and your career?

Andrew Nerys: Passing these exams allowed me to make an exciting transition to a new team and gave me a sense of direction for my professional future. In a more indirect way, it also helped reinforce the feeling that I’m capable of achieving my goals when I have the right resources and mindset.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 7, and Series 63.

Interview: How Alexandria Coyne Passed Four Securities Licensing Exams

If you’re considering taking the SIE, Series 6, Series 63, Series 7, or another securities licensing exam, read these valuable insights on how to study for and pass your exams. Continue reading

It’s not uncommon for those in the securities and investment industries to need more than one securities license. But the determination involved in passing multiple securities licensing exams (especially in a short time period) is substantial. Case in point: Alexandria Coyne, Financial Advisor at Northwestern Mutual, who passed her fourth exam with Solomon Exam Prep earlier this year. She now has the SIE, Series 6, Series 7, and Series 63 under her belt. Alex was kind enough to answer Solomon’s questions about her study approach and how she achieved success four times.

“I really wanted to learn the material through and through, so I was never preparing for an exam; I was preparing for a career.”

Alex Coyne

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Alex Coyne: I took the SIE, the 6, the 63 and then the 7. If I could do it all over, I’d do the same thing! The SIE was a great entry level exam for the 6. To me, there was only a little bit of differentiating content between the two exams. I will always recommend splitting up the 6 and the 7. I think the 6 was just high-level enough to get an understanding of the content. The 7, on the other hand, got extremely detailed. I truly believe that if I went straight into the 7 from the SIE, I wouldn’t have been successful on my first attempt.

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Alex Coyne: Most definitely the Series 7. I just think that there were a lot of details to remember and a lot of information to digest.

Solomon Exam Prep: How did you approach studying for your exams?  

Alex Coyne: I recommend everyone to Solomon. I think that Solomon did an amazing job with the study material. What I have found to be most successful for me:

The first thing I did was set an exam date. That was just knowing my ability to procrastinate, so I had to put a timeline on this thing before it even started!

Order the book. Read the entire book in full, highlighting important content and underlining even more important content. I found that 20 pages per day was my reading goal.

Once the book was read in full, I WROTE out all the highlighted and underlined information onto a notebook. Yes, I outlined the entire book. I found that approximately 10 pages of outlining per day was my capacity (approx. 1-2 hours). It took an entire 2-subject notebook for an entire outline. (Still no quizzes at this point.)

While I was reading and outlining, I played the online Video Lectures through my AUX cord in my car wherever I went. From start to finish. 

After outlining the entire book, I went to my NOTEBOOK (outlined) and I went through the content in detail. After I studied Chapter 1, I took Ch. 1 practice quizzes until passing consistently. Then Chapter 2, 3, 4 and so on….

After all of the Chapter quizzes were complete, I did the practice tests. I probably did 15-20 total practice exams. Some timed, some with immediate feedback. I made sure to read the feedback and understand what questions I was getting wrong and use my book and notebook to go back to content and work through the wrong answers. 

On the 7, the Options Video Lecture was a total game changer for me. I watched it twice and memorized every table on there. That single-handedly won me 15-20 questions on the Series 7 exam.

“…there are still things from the study material that I use in client meetings today, 8 months since the Series 7 exam.”

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Alex Coyne: I took all of my tests in a testing center. My advice: Practice your “dump sheet.” AKA: Once you START the exam, dump out all you can remember on scratch paper. I actually practiced my dump sheet, especially for the Series 7. The week leading up the 7, randomly throughout the day, I would stop what I was doing, find paper, and practice my dump sheet. By the time I took my Series 7, I pretty well had my dump sheet memorized. That was very helpful for me.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Alex Coyne: Passing on the first try is very possible, but you will only get out of the material the level of commitment you decide to put into it. I really wanted to learn the material through and through, so I was never preparing for an exam; I was preparing for a career. I saw this knowledge as transformational for my financial practice. I took it seriously and there are still things from the study material that I use in client meetings today, 8 months since the Series 7 exam. My advice is to have that mentality when it comes to learning; don’t just cram to pass an exam. Our clients deserve better.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 6, Series 7, and Series 63.

Interview: How Fernando Russo passed four securities licensing exams

Preparing for the SIE, Series 63, Series 79, Series 82, or another securities licensing exam? Read about one Solomon Exam Prep student’s path to success. Continue reading

Passing a securities licensing exam is no small feat, but four? Solomon Exam Prep recently reached out to Fernando Russo, Vice President of Investment Banking at Young America Capital, to learn more about his success in passing the SIE, Series 82, Series 63, and Series 79 exams (in that order). Whether you need to pass one or multiple exams to reach your career goals, you’ll want to hear about Fernando’s process and helpful tips.

“The content is not rocket science and the math is very simple. It just takes time, dedication and good study materials.”

Fernando Russo

Solomon Exam Prep: Why did you take your exams in the order that you did? Was this order helpful, or would you change anything if you had to do it again? 

Fernando Russo: After the SIE I decided to take the 82 first because I wanted to be licensed as soon as possible. The materials for the 82 seemed simple and I felt confident that I could pass. The 63 came right after because it allowed me to offer securities in my state and be fully registered as an investment banker. The 63 is actually very tricky because it is prepared by NASAA and not by FINRA. Some of the materials are similar but the exam is very different from FINRA exams. 

I took the 79 last. 

I could’ve gone straight for the 79 but I think that taking the 82 was a good way to get started. It helps build up confidence and knowledge.  

The 82, for some, might feel like a practice exam for the 79.

Solomon Exam Prep: Out of the exams you passed, which one required the most study time and why? 

Fernando Russo: The 63 is trickier than most people think it is. The study materials are not as extensive as the 79 but the content is very specific and one needs to remember very detailed pieces of information (dates, percentages, etc.). I was studying a lot (2-3 hours a day during the week and 4-6 hours during weekends) but not getting the scores that I wanted on my practice exams, so I had to go back to the books and memorize 85% of the materials.  

I spent 25% more time studying for the 63 than for the 79.

“The audiobooks are great. I would listen to the chapters while driving, while working out and while doing many other activities.”

Solomon Exam Prep: How did you approach studying for your exams?  

Fernando Russo: I studied each chapter and then took a practice exam for that specific content or section. If I didn’t do well, I would go back to the materials and do it all over again until I passed. I did that over and over and over until I passed. I also found a lot of help in the notes that are found in the Resources Folder. These are great to find definitions, tables and simple explanations for seemingly complicated terms. The audiobooks are great. I would listen to the chapters while driving, while working out and while doing many other activities.

Solomon Exam Prep: How did you take the exams – at a testing center or remotely? How was your experience, and do you have any tips to share? 

Fernando Russo: I took all my exams at the same Prometric test center in Chicago, and I did so on Monday mornings. I took Friday off from work and studied all day on Friday and on Saturday. On Sunday, the day before each exam, I did not study at all. Instead of studying I spent the whole day doing a fun activity with my family.  

I think that is very necessary to allow the mind to rest before the exam. For each test I studied 30-45 days nonstop and one day of peace before the exam felt necessary. It worked. Each time I woke up the day of the test I felt relaxed and ready.  

Solomon Exam Prep: Any words of wisdom to help motivate others who are preparing for exams? 

Fernando Russo: Take the practice exams. Take them 1,000 times and then some more. I also recommend studying every day, even 10-15 minutes if the student is swamped with other activities. It keeps the mind engaged and the program moving forward. The content is not rocket science and the math is very simple. It just takes time, dedication and good study materials.

Visit the Solomon Exam Prep website to explore study materials for 21 different securities licensing exams, including the SIE, Series 63, Series 79, and Series 82.

What Are the Permitted Activities of a Series 7 General Securities Representative?

Solomon Exam Prep explains what a Series 7 General Securities Representative can and cannot do and how this compares to other rep-level registrations. Continue reading

Of the representative-level FINRA registrations categories, the General Securities Representative (Series 7) registration is considered by many to be the most valuable, due to the range of products it allows you to sell. But how “general” is it? Are there other representative-level registrations that permit you do things a Series 7 representative cannot?

What is a Series 7 representative permitted to do?

FINRA allows a General Securities Representative to solicit the purchase and sales of all securities products, including:

    • Stocks, whether from IPOs, private placements, or secondary market trading
    • Other corporate securities, such as bonds, rights, and warrants
    • Mutual funds
    • Closed-end funds
    • Money market funds
    • Unit investment trusts (UITs)
    • Exchange-traded funds (ETFs)
    • Real estate investment trusts (REITs)
    • Variable contracts (insurance products whose funds are invested in securities)
    • Municipal securities
    • Municipal fund securities, such as 529 plans
    • Options
    • Government securities
    • Direct participation programs (DPPs)
    • Venture capital
    • Hedge funds

This long list of products means that a Series 7 registered rep may perform the functions of an Investment Company and Variable Contracts Representative (Series 6), Direct Participation Programs Representative (Series 22), or Private Securities Offerings Representative (Series 82).

Besides sales, General Securities Representatives may also perform certain activities closely related to sales. They may:

    • recommend investments after performing a suitability analysis for the customer
    • accept unsolicited orders
    • open customer accounts, subject to approval by a principal

What is a Series 7 representative NOT permitted to do?

Though a General Securities Representative may solicit purchases of IPO shares, he may not work on underwriting or structuring an IPO, or any other securities offerings. This means that he is not permitted to advise an issuer on an offering. This work requires registration as an Investment Banking Representative (Series 79). Likewise, working on municipal underwriting requires registration as a Municipal Securities Representative (Series 52).

A Series 7 representative is also not qualified to perform the back-office functions of an Operations Professional (Series 99). Among these functions are maintaining possession or control of the firm’s securities, calculating margin for margin accounts, and sending trade confirmations and account statements.

Of course, every registered representative must also pass the FINRA Securities Industry Essentials (SIE) exam. The SIE doesn’t qualify you to do anything, instead it is a foundational exam that focuses on industry terminology, securities products, the structure and function of the markets, regulatory agencies and their functions, and regulated and prohibited practices. Unlike other FINRA securities exams, you do not need to be employed or sponsored by a broker-dealer in order to take the SIE. The only requirement is that you be 18 years old.

If you’re considering taking the Series 7 exam, Solomon Exam Prep is here to help. Solomon provides a wide variety of study materials, together with resources such as study schedules, the Ask The Professor function, and helpful exam information. Explore Solomon’s Series 7 study materials.

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How to Calculate Gains and Losses on Exercised Options

Options are a common topic on the Series 6, Series 7, Series 65, Series 66, and SIE exams. Read our guide to calculating gains and losses on exercised options. Continue reading

Options are a topic that many taking the Series 6, Series 7, Series 65, Series 66, and SIE exams have to deal with. One of the biggest problems that students have with options questions occurs when they are asked to calculate gains and losses on exercised options. As long as you understand a few basic points, these types of questions can be a breeze and definitely nothing to lose sleep over.  

First of all, let’s remind ourselves of what an option is.  An option is a contract between two parties that gives the buyer of the contract the right to buy or sell an underlying asset to the other party in the future for a specific price. The specific price is called the “exercise” or “strike” price.  The seller of the option, on the other hand, is obligated to buy or sell, at the strike price. The option to buy is a “call” option, the option to sell is a “put” option.   

To calculate gains and losses on exercised options, you first need to understand what is happening as a result of an options transaction.  When an option is exercised, that means its holder chooses to either buy or sell the underlying security at the strike price. With an exercised call option, the holder purchases shares of the underlying security from the options seller; with an exercised put option, the holder sells shares of the underlying security to the options seller. The sale in each case occurs at the option’s strike price.

Buying – Exercised Call Option

When a call options holder exercises her option by purchasing the underlying shares, she must add the cost of those shares to the premium she paid to obtain the option in the first place. This sum represents the option holder’s total money spent as a result of her options transaction. If the option holder then elects to sell the underlying securities she’s just purchased at their current market price, the money she receives from the sale will be money she takes in. To calculate her gain or loss, subtract the money she paid out from the money she took in. It’s as simple as that. 

So, if, for instance, Marie paid $200 in premiums to purchase a call option with a strike price of $20 and then exercised the option by purchasing 100 shares of the underlying stock, the money she spent as a result of her options transaction will be $2,200 ($200 premium paid + $2,000 purchase price for underlying securities). If she then sells those 100 shares at the market price of $25, she will receive $2,500 in sales proceeds. Subtracting the money she spent from the amount she received will result in a $300 gain ($2,500 sale proceeds – $2,000 purchase price – $200 premium paid = $300 gain.)

Buying – Exercised Put Option

In order for a put options holder to exercise his option, he must have 100 shares of the underlying security to sell to the options seller. That means he needs to go out in the market and purchase shares at their market price. The money he pays for those securities plus the premium he paid to purchase his put option in the first place represents money spent as a result of his options transaction. The options holder will then sell those 100 shares to the options seller at the strike price. When he does this, he receives the sale proceeds. Subtracting the money spent on the put from the sale proceeds will result in the put investor’s gain or loss.   

So, if, for instance, Pierre paid $300 in premiums to purchase a put option with a strike price of $30 and then purchases 100 shares of the underlying stock when its market price drops to $25, he will have spent $2,800 as a result of his options transaction ($300 premium + $2,500 purchase price for underlying shares). He will then sell those 100 shares to the options seller at their strike price of $30 and take in $3,000 from his sale. Thus, Pierre will make a total of $200 on his options transaction ($3,000 sale proceeds - $300 premium – $2,500 purchase price = $200 gain). 

Selling an Option

Now let’s look at gains or losses from the perspective of an options seller. Remember that when someone sells an option, he receives the premium from the options buyer. If the option expires unexercised, the seller gets to keep his entire premium received, which represents his maximum potential gain. If the option is exercised, he will either be required to sell shares of the underlying security to the option holder in the case of a call option or buy shares from the option holder in the case of a put option. Each of an exercised call or an exercised put option transaction is made at the option’s strike price.

Selling – Exercised Call Option

When a call option is exercised, the option seller must obtain 100 shares of the underlying stock to sell to the options holder. To do so, he will have to purchase the shares at their current market price, which will be higher than the option’s strike price. He will then sell them to the option holder at the strike price. The money he takes in from the sale is added to the premiums he received when shorting the option, and this totals the money he takes in as part of his options transaction. The money he paid to obtain the underlying securities is the money he pays out. Subtracting the money he pays out from the money he takes in results in his overall gain or loss.

For example, let’s say Michael sells a call option with a strike price of $50 and receives premiums totaling $500. If the option is exercised, and Mike purchases the underlying shares at $55, he will have paid out $5,500 as a result of his options transaction. At the same time, he will have received $5,500 ($500 premium + $5,000 strike price). Thus, Mike will break even on this transaction; money taken in will be equal to money paid out.

Buying – Exercised Put Option

When a put option is exercised, the option seller must purchase 100 shares of the underlying security from the options holder at the strike price. This represents money the options seller pays out. The options holder has already received the premium when she sold the option, and after purchasing the 100 shares, she can sell them for their current market price. The combination of the seller’s sale proceeds and the premium received represents money taken in. Subtracting money paid out from money taken in will result in the investor’s gain or loss. 

Let’s say Maribel shorts a put option and receives premiums totaling $400. The option has a strike price of $40, and the option holder exercises it when the underlying stock is trading at $35. This means Maribel is obligated to pay $4,000 total for the 100 underlying shares. This is money she pays out. She has already taken in $400, and if she chooses to sell the underlying stock at its current market price, she will take in an additional $3,500 in sales proceeds. This means she will receive a total of $3,900 from his options transaction ($3,500 sale proceeds + $400 premium) and paid out a total of $4,000. As a result, she has lost $100 on his options transaction ($3,900 money in – $4,000 money out = -$100).

As long as you understand what is occurring when an option is exercised, calculating gains and losses is as simple as comparing the money the investor takes in to the money she pays out. Calculating gains and losses on exercised options requires an understanding of the transaction and some simple math. Follow the guidance above and you will be able to correctly answer this type of question on your securities licensing exam.

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The Power of Explaining: A Study Strategy Backed by Research

If you’re studying for the SIE, Series 65, Series 7, or another securities licensing exam, try this evidence-based study strategy. Continue reading

Updated June 23, 2022
Solomon Exam Prep’s learning system is built on understanding how people learn. Solomon is always looking for new ways to help our students learn more effectively and pass their securities exams.  

Research from Dr. Tania Lombrozo of UC Berkeley, published in the journal Trends in Cognitive Science, shows that explaining a new concept to another person is an enormously helpful learning technique. When you explain an unfamiliar concept to another person, your brain makes crucial learning connections. However, many people don’t have a person around them that is ready to listen to their new knowledge. Thus, Dr. Lombrozo recommends self-explanation, which is the practice of explaining concepts to yourself in order to better understand them.

Why does explaining work?

Dr. Lombrozo found that the positive effects of self-explanation can be attributed to the generalization process. Explaining requires you to put new information in the context of “prior beliefs,” which makes you generalize the information. In doing so, you’re forced to pick out what is most necessary for understanding the concept. In thinking about how to explain something, you in fact learn more about the thing itself!  

Dr. Lombrozo describes an experiment by psychologists Amsterlaw and Wellman that demonstrates the power of explaining in understanding. In Amsterlaw and Wellman’s experiment, they administered logic tests to children under various conditions. During the course of the experiment, the children were split into groups. One group would answer, and then they would be asked to explain the correct answer once it was revealed. A comparison group did the same, but only for half the problems. The third group was a control group and gave no explanation at all.

According to Amsterlaw and Wellman, “children in the explanation condition significantly outperformed the comparison and control groups….” In other words, explaining increased their understanding.

How to use this strategy for licensing exams:

What does this mean if you’re studying for the Series 65 or the Series 7 or some other securities licensing exam? Solomon Exam Prep suggests finding someone in your life who will listen to you explain topics from your securities exam prep. The person you choose doesn’t need to have any knowledge of securities. The person just needs to be a good listener. Even better, someone who will ask questions.

What if you don’t have anyone who can do that for you? Well, as Dr. Lombrozo showed, the practice of self-explanation is also helpful and will increase your understanding of the material you’re trying to learn.

Other recommended study strategies include:  

    • Listen to the Solomon Audiobook while you read the Solomon Study Guide.
    • As you read the Study Guide and watch the Solomon Video Lectures, take notes by hand.
    • When practicing in the Solomon Exam Simulator, read and re-read the question at least twice. 
    • If you answer a question correctly, explain to yourself why it was correct before reading the question rationale.  
    • If you answer a question incorrectly, read the rationale carefully. Explain to yourself what the right answer is, and why. Write down the explanation in your notes. 
    • Study with a partner. Trade off testing each other on concepts and asking for an explanation.  

Visit the Solomon Exam Prep  website to explore study materials for 21 different securities licensing exams, including the SIE and the Series 3, 6, 7, 14, 22, 24, 26, 27, 28, 50, 51, 52, 53, 54, 63, 65, 66, 79, 82 and 99.

Simplifying After-Tax and Tax-Equivalent Yields

For many when choosing bonds the most important factor is the tax implications. Knowing the after-tax yield and tax-equivalent yield calculations is critical. Continue reading

Bonds can be nice, reliable investments. Pay some money to an issuing company or municipality, receive interest payments twice a year, and then get all of your original investment back sometime down the road. Sounds like a plan.

But which bonds are best for a specific investor? There are many factors for bond investors to consider when choosing which bond to buy, but for many the most important is the tax implications of investing in one bond instead of another. This concern is most prominent when an investor compares a corporate bond to a municipal bond. For reference, a corporate bond is one issued by a corporation or business, while a municipal bond is one issued by a state, city, or municipal agency.

Comparing the tax implications of these bonds is important because the interest payments that investors receive from municipal bonds are typically not taxed at the federal level. Conversely, interest payments on all corporate bonds are subject to federal taxation. This means that someone in the 32% tax bracket will have to give Uncle Sam 32% of his interest received from a corporate bond, while he will not give up any of his interest received from a municipal bond. Additionally, an investor does not pay state taxes on municipal bond interest if the bond is issued in the state in which the investor lives. Corporate bond interest, on the other hand, is always subject to state tax.

  • interest payments taxed federally
  • interest payments subject to state tax
  • interest payments not federally taxed
  • interest payments not taxed by state if issued in state local to investor

For these reasons, when comparing a corporate bond to a municipal bond, understanding the after-tax yield and the tax-equivalent or corporate-equivalent yield is essential. This is true both for investors and for those who will be taking many of the FINRA, NASAA, and MSRB exams. So let’s look at how to calculate those yields.

After-Tax Yield

First the after-tax yield. The after-tax yield tells you the amount of a corporate bond’s annual interest payment that an investor will take home after accounting for taxes he will be assessed on that interest. Once that amount is known, the investor can compare it to the yield he would receive from a specific municipal bond and see which potential investment would put more money in his pocket. When calculating the after-tax yield, start with the annual interest percentage (a.k.a. coupon percentage) of the corporate bond, which represents the percent of the bond’s par value that an investor receives each year in interest. For instance, a corporate bond that has a $1,000 par value and an interest rate of 8% will pay an investor $80 dollars in annual interest ($1,000 x 0.08 = $80). You then multiply the coupon percentage by 1 minus the taxes an investor will pay on the corporate bond that he will not pay on the municipal bond that he is considering.

This is where it sometimes gets tricky. What taxes will an investor not pay when investing in a municipal bond that he will pay when investing in a corporate bond? Remember that for just about all municipal bonds, investors do not pay federal tax on interest received.

The formula for after tax yield is:

After-tax yield = Corporate Bond Annual Interest Rate x
( 1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)

On the other hand, an investor always pays federal taxes on interest received from a corporate bond. Additionally, an investor does not pay state taxes on interest payments from a municipal bond issued in the state in which the investor lives.

On the other hand, an investor always pays state taxes on interest received from corporate bonds. So if you see an exam question in which you need to calculate the after-tax yield of a corporate bond to compare it the yield on a municipal bond, you will always subtract the investor’s federal income tax rate from 1 in the equation. You will also subtract the investor’s state tax rate from 1 if the municipal bond is issued in the investor’s state of residence.

Seems simple, right? Here’s a question to provide context:

Marilyn is a resident of Kentucky. She is considering a bond issued by XYZ Corporation. The bond comes with a 7% annual interest rate. Marilyn is also interested in purchasing municipal bonds issued in Ohio. If Marilyn has a federal tax rate of 28% and Kentucky’s state tax rate is 4%, what is the after-tax yield on XYZ’s bond?

To answer this question, begin with the interest rate on the XYZ bond, which is 7%. Then subtract from 1 the taxes Marilyn will not pay if she invests in the municipal bond in question. She will not pay federal taxes on the municipal bond interest, so you would subtract 28%, or .28. However, because Marilyn is a resident of Kentucky and the municipal bonds she is considering are issued in Ohio, she will pay state taxes on the bond. That means you would not subtract her state tax rate (0.04) from 1. After subtracting .28 from 1 to get 0.72, you multiply that amount by the 7% coupon payment. Doing so gives you a value of 5.04 (7 x 0.72 = 5.04%). This means that the interest amount she would take home from the XYZ bond would be equivalent to what she would receive from a municipal bond issued in Ohio that has a 5.04% interest payment. If she can get a bond issued in Ohio that has a higher interest payment than 5.04%, she would take home more money in annual interest payments than she would from the XYZ bond.

Tax-Equivalent Yield

The second approach an investor can take to compare how a potential bond investment will be affected by taxation is to calculate the tax-equivalent yield (TEY). This calculation is also known as the corporate-equivalent yield (CEY). The TEY/CEY measures the yield that a corporate bond will have to pay to be equivalent to a given municipal bond after accounting for taxes due. To calculate this yield, you take the annual interest of the given municipal bond and divide it by 1 minus the taxes the investor will not pay if she invests in the municipal bond that she would pay if she invested in a corporate bond.

Here’s the formula for tax-equivalent yield:

Tax-equivalent yield = Municipal Bond Annual Interest Rate /
(1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)

When determining what tax rates to subtract from 1 in the denominator, the same principal as described above applies. That is, the investor will not have to pay federal tax on the municipal bond, so her federal rate is always subtracted from 1. The investor will also not have to pay state tax on the bond if it is issued in the state in which she lives. If that is the case, the investor’s state tax rate should also be subtracted from 1. However, if the investor lives in a different state than the state in which the bond is issued, she will have to pay state taxes on the interest payments. In that case, her state tax rate would not be subtracted from 1.

Here’s another question to provide context.

Franz, a resident of Michigan, has purchased a Michigan municipal bond that pays 4% annual interest. If his federal tax bracket is 30% and the Michigan state tax rate is 4%, what interest rate would he need to receive on a corporate bond to have a comparable rate after accounting for taxes owed?

To answer this question, begin with the interest rate on the Michigan municipal bond, which is 4%. Then subtract from 1 the taxes that Franz will not pay on that bond that he would pay if he invested in a corporate bond. He wouldn’t pay federal taxes on the municipal bond interest, so you would subtract 0.30 from 1. Additionally, since the bond is issued in Michigan and he is a Michigan resident, Franz will not pay state taxes on the bond. So you subtract Michigan’s state tax rate of 4%, or 0.04, from 1 as well. After subtracting 0.30 and 0.04 from 1 to get 0.66, you divide that number into the 4% municipal bond annual interest. Doing so gives a value of 6.06 (4 / 0.66 = 6.06). This means Franz would need to find a corporate bond that pays 6.06% in annual interest to match the amount of interest he will take home annually from the Michigan municipal bond after accounting for taxes.

Many people are confused by the concepts of the after-tax and tax-equivalent yields. But you don’t have to be one of them. Just follow this simple approach and any questions you see on this topic will not be overly taxing.

Mastering these equations will help you succeed in passing the Series 6, Series 7, Series 50, Series 52, Series 65, Series 66, and Series 82.

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