Free Series 66 Practice Questions
Test your knowledge with these sample Series 66 exam questions. Each question includes detailed explanations to help you master the Uniform Combined State Law Examination.
8
Questions
8
Free practice questions covering all major Series 66 exam topics, including state law, federal regulations, and fiduciary duties.
100%
Explained
100%
Every answer includes comprehensive explanations based on the Uniform Securities Act and the Investment Advisers Act of 1940.
1.5
Min Each
1.5
Average time recommended per question to simulate real Series 66 exam conditions and build proper timing skills.
Series 66 Practice Questions
These practice questions mirror the format and difficulty of the actual Series 66 exam. Take your time to read each question carefully and select the best answer.
An agent’s registration is effective in a state when:
A) The agent passes the Series 66 exam
B) The Administrator grants registration
C) The agent’s broker-dealer is registered in the state
D) All of the above
Answer: D) All of the above
Explanation: An agent’s registration is effective only when all three conditions are met: the agent has passed the required exams (like the Series 66), their employing broker-dealer is registered in the state, and the state Administrator grants the registration.
Study Tip: Remember that registration is a three-part process: personal qualification, firm registration, and state approval.
Which of the following is NOT an exempt transaction under the Uniform Securities Act?
A) A transaction between an issuer and an underwriter
B) An unsolicited, non-issuer transaction
C) A trade with an institutional investor
D) A sale to more than 10 retail investors in a 12-month period
Answer: D) A sale to more than 10 retail investors in a 12-month period
Explanation: A sale to more than 10 retail investors in a 12-month period would not be considered an exempt transaction under the private placement exemption. The other options are all specifically listed as exempt transactions under the USA.
Study Tip: Memorize the key exempt transactions, especially the private placement rule (no more than 10 retail investors).
If an investment adviser has custody of client funds, they are required to:
A) Segregate client funds and securities
B) Provide clients with quarterly itemized statements
C) Undergo an annual surprise audit by an independent accountant
D) All of the above
Answer: D) All of the above
Explanation: The custody rules under the Investment Advisers Act require all three of these conditions to be met to protect client assets. This includes segregating client funds, providing quarterly statements, and undergoing an annual surprise audit.
Study Tip: Remember the three main requirements for custody: segregation, statements, and surprise audits.
Which of the following practices is prohibited for an investment adviser?
A) Charging a performance-based fee to a qualified client
B) Using testimonials in advertising
C) Sharing in the profits and losses of a client’s account
D) Recommending a security that the adviser also owns
Answer: C) Sharing in the profits and losses of a client's account
Explanation: Investment advisers are prohibited from sharing in the profits and losses of a client’s account. This is a key ethical violation. The other options are permissible under certain conditions and with proper disclosure.
Study Tip: Know the specific prohibited practices. While many actions are allowed with disclosure, sharing in profits/losses is strictly forbidden.
Which of the following would NOT be considered an investment adviser?
A) A financial planner who provides advice for a fee
B) A lawyer whose investment advice is incidental to their legal practice
C) A portfolio manager for a mutual fund
D) A publisher of a newsletter that provides specific investment advice
Answer: B) A lawyer whose investment advice is incidental to their legal practice
Explanation: Professionals like lawyers, accountants, teachers, and engineers (LATE) are excluded from the definition of an investment adviser as long as their investment advice is solely incidental to their professional practice.
Study Tip: Remember the LATE exclusion: Lawyers, Accountants, Teachers, Engineers.
Which of the following is a leading economic indicator?
A) The prime rate
B) The Consumer Price Index (CPI)
C) Building permits
D) Industrial production
Answer: C) Building permits
Explanation: Building permits are a leading economic indicator because they suggest future economic activity. The other options are coincident (industrial production) or lagging (prime rate, CPI) indicators.
Study Tip: Memorize the key leading, lagging, and coincident economic indicators. This is a common question area.
A client’s portfolio is 60% stocks, 30% bonds, and 10% cash. This is an example of:
A) Strategic asset allocation
B) Tactical asset allocation
C) Market timing
D) Sector rotation
Answer: A) Strategic asset allocation
Explanation: Strategic asset allocation involves setting target allocations and rebalancing periodically. Tactical asset allocation is a more active strategy that deviates from these targets to capitalize on short-term market opportunities.
Study Tip: Strategic = Long-term, set-and-forget. Tactical = Short-term, active adjustments.
An offer to sell a security is considered to be made in a state if the offer:
A) Originates in the state
B) Is directed to the state
C) Is accepted in the state
D) All of the above
Answer: D) All of the above
Explanation: An offer is considered to be made in a state if it originates in the state, is directed to the state, or is accepted in the state. This gives the state Administrator jurisdiction over the transaction.
Study Tip: Remember the three prongs of jurisdiction: originates, directed to, accepted in.
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