The Series 66 combines state securities law with investment adviser topics, so one exam can qualify you as both a securities agent and an investment adviser representative (IAR). It is run by NASAA, the North American Securities Administrators Association, and is usually taken alongside the Series 7. Try these 8 free practice questions.
Exam at a glance
8 free Series 66 practice questions
1. Which is a fiduciary obligation of an investment adviser?
- A. Guaranteeing returns
- B. Disclosing material conflicts of interest
- C. Trading only in Treasury bonds
- D. Charging the lowest fee in the state
Show answer
Answer: B. As fiduciaries, advisers must disclose material conflicts and act in the client's best interest.
2. An investment adviser has custody when it:
- A. Gives advice on bonds
- B. Holds or can access client funds or securities
- C. Charges an hourly fee
- D. Sends a newsletter
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Answer: B. Custody means holding, directly or indirectly, client funds or securities, or having authority to obtain them.
3. Under the Uniform Securities Act, an adviser must generally deliver its disclosure brochure:
- A. Only if the client asks
- B. At least 48 hours before or at the time of entering the contract (with a 5-business-day right to cancel if at signing)
- C. One year after the contract
- D. Never
Show answer
Answer: B. The brochure is delivered at least 48 hours before signing, or at signing with a 5-business-day right to cancel without penalty.
4. Which is NOT a security under the Uniform Securities Act?
- A. Common stock
- B. A fixed annuity
- C. A corporate bond
- D. An investment contract
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Answer: B. Fixed annuities are insurance products, not securities. Variable annuities are securities.
5. An investment advisory contract may NOT be assigned without:
- A. The client's consent
- B. FINRA approval
- C. A court order
- D. A new brochure only
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Answer: A. Advisory contracts must say they can't be assigned without the client's consent.
6. Required minimum distributions (RMDs) are NOT required during the original owner's lifetime from:
- A. A traditional IRA
- B. A 401(k) of a retired worker
- C. A Roth IRA
- D. A SEP IRA
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Answer: C. Roth IRA owners face no lifetime RMDs. Traditional, SEP and 401(k) accounts require them starting at the required age.
7. Which risk is most hurt by inflation?
- A. A fixed-coupon long-term bond's purchasing power
- B. A money market fund's liquidity
- C. A stock's voting rights
- D. A Treasury bill's credit quality
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Answer: A. Fixed payments lose purchasing power when prices rise, so long-term fixed-rate bonds carry high inflation (purchasing power) risk.
8. An agent sells a security at an unreasonable markup. This is:
- A. Allowed if disclosed afterward
- B. An unethical practice
- C. Required by law
- D. Allowed for exempt securities only
Show answer
Answer: B. Charging unreasonable markups or commissions is an unethical business practice under NASAA's policies.
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