Series 65 Practice Exam.
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1. How many total scored questions must a candidate answer on the Series 65 examination?
- A. 92 scored questions
- B. 130 scored questions
- C. 180 scored questions
- D. 187 scored questions
Show answer & explanation
Answer: B
The Series 65 contains 130 scored questions. The value 92 is the number needed to pass, 180 is the time allotted in minutes, and 187 is the fee in dollars — none of which is the scored-question count.2. An investor holds a portfolio of long-term, high-quality corporate bonds. If prevailing market interest rates rise sharply, what is the MOST direct effect on the current market value of these existing bonds?
- A. Their market value will generally rise because the issuer's credit improves
- B. Their market value will generally fall because their fixed coupons become less attractive
- C. Their market value is unaffected because they are high-quality
- D. Their coupon payments will automatically increase to match new rates
Show answer & explanation
Answer: B
This tests interest-rate risk. Existing fixed-coupon bonds move inversely to market rates: when rates rise, the fixed coupons are worth relatively less, so the bonds' market price falls. Long-term, high-quality bonds are especially sensitive to rate changes rather than credit changes.3. When comparing two investments, an analyst notes that Investment A has a higher expected return than Investment B but also a higher expected variability of outcomes. This relationship BEST illustrates which fundamental principle?
- A. Higher potential returns are generally associated with higher risk (the risk-return tradeoff)
- B. Risk and return are unrelated to one another
- C. Lower-risk investments always produce higher returns
- D. Variability of outcomes reduces expected return to zero
Show answer & explanation
Answer: A
The risk-return tradeoff holds that investors generally must accept greater risk (variability of outcomes) to pursue higher expected returns. Investment A's higher expected return paired with greater variability directly illustrates this core relationship.4. A study group is comparing Series 65 exam logistics before drilling the prohibited-activities section. Which pairing of exam parameters is stated correctly?
- A. 130 scored questions and a $92 fee
- B. 130 scored questions and 180 minutes to complete
- C. 92 scored questions and 187 minutes to complete
- D. 187 scored questions and a 180-question passing score
Show answer & explanation
Answer: B
The Series 65 exam consists of 130 scored questions with 180 minutes allowed for completion. The other options mismatch the fee, question count, time limit, or passing score.5. A candidate who fails the Series 65 must re-register and pay the fee again. If a candidate pays for two attempts, what is the total amount paid in registration fees?
- A. $187
- B. $260
- C. $374
- D. $187 plus a separate 92-dollar surcharge
Show answer & explanation
Answer: C
With a single-attempt fee of $187, two attempts total 2 × $187 = $374. This is an inference derived by multiplying the stated fee by two attempts.6. A candidate is budgeting for the Series 65 exam. According to the registration information, what is the cost to sit for the exam?
- A. $92
- B. $130
- C. $187
- D. $180
Show answer & explanation
Answer: C
The Series 65 exam fee is $187. The other figures are distractors drawn from unrelated exam parameters (question count, passing threshold, time limit) and do not represent the fee.7. Approximately what percentage of scored questions must a candidate answer correctly to pass the Series 65 exam?
- A. About 51%
- B. About 63%
- C. About 71%
- D. About 85%
Show answer & explanation
Answer: C
With 92 of 130 scored questions required, the passing rate is 92 ÷ 130 ≈ 0.708, or roughly 71%. This is derived by dividing the passing count by the total scored questions.8. Which of the following correctly pairs a Series 65 exam parameter with its value?
- A. Exam fee — $130
- B. Time limit — 92 minutes
- C. Scored questions — 130
- D. Passing count — 187
Show answer & explanation
Answer: C
The exam has 130 scored questions. The other pairings mismatch values: the fee is $187 (not $130), the time limit is 180 minutes (not 92), and the passing count is 92 (not 187).9. If a candidate answers the minimum number of scored questions needed to pass, how many of the 130 scored questions would they have missed?
- A. 38 questions
- B. 44 questions
- C. 48 questions
- D. 52 questions
Show answer & explanation
Answer: A
The minimum passing count is 92 of 130 scored questions. Missing the remainder means 130 − 92 = 38 questions answered incorrectly. This is derived by subtracting the passing count from the total scored questions.10. An investor buys shares in a small company whose stock trades infrequently with wide bid-ask spreads. When she tries to sell a large position quickly, she can only do so at a substantially lower price. This situation MOST directly illustrates:
- A. Inflation risk
- B. Liquidity risk
- C. Legislative risk
- D. Currency risk
Show answer & explanation
Answer: B
Liquidity risk is the risk that an investor cannot sell an asset quickly at or near its fair value. Thinly traded securities with wide spreads force sellers to accept price concessions, which is the defining feature of liquidity risk.11. How many scored questions must a candidate answer correctly in order to pass the Series 65 exam?
- A. 65
- B. 92
- C. 130
- D. 187
Show answer & explanation
Answer: B
A passing result requires answering at least 92 of the 130 scored questions correctly. Choice C is the total number of scored questions, not the passing count.12. The Series 65 exam consists of how many scored questions?
- A. 92 scored questions
- B. 110 scored questions
- C. 130 scored questions
- D. 180 scored questions
Show answer & explanation
Answer: C
The exam contains 130 scored questions. Choice A reflects the number needed to pass, and choice D reflects the time allotted in minutes, not the question count.13. How much time is a candidate given to complete the Series 65 exam?
- A. 90 minutes
- B. 130 minutes
- C. 180 minutes
- D. 187 minutes
Show answer & explanation
Answer: C
Candidates are allotted 180 minutes to complete the exam. Choices B and D are distractors matching the number of scored questions and the fee, respectively.14. Two mutual funds have identical average annual returns over five years, but Fund X has a much higher standard deviation of returns than Fund Y. Which statement BEST characterizes the difference?
- A. Fund X has experienced greater volatility around its average return
- B. Fund X is guaranteed to outperform Fund Y going forward
- C. Fund Y carries more systematic risk than Fund X
- D. Standard deviation measures only downside losses, so Fund X lost more money
Show answer & explanation
Answer: A
Standard deviation measures the dispersion, or volatility, of returns around the average. A higher standard deviation means returns were more spread out, indicating greater volatility—not a guarantee of future results and not a measure limited to downside only.15. A retiree relies on a fixed nominal income from a long-term bond ladder. Over a prolonged period of rising consumer prices, what is the PRIMARY risk to this income stream?
- A. The bonds will default
- B. The purchasing power of the fixed payments will decline
- C. The bonds will become more liquid
- D. The issuer will call the bonds at a premium
Show answer & explanation
Answer: B
Purchasing-power (inflation) risk is the erosion of the real value of fixed payments as prices rise. Fixed nominal income streams are especially vulnerable because the payments do not adjust for inflation, reducing what each payment can buy.16. Which characteristic BEST distinguishes systematic (market) risk from unsystematic (nonsystematic) risk?
- A. Systematic risk can be eliminated through broad diversification, while unsystematic risk cannot
- B. Systematic risk affects the market as a whole and cannot be diversified away, while unsystematic risk is specific to an issuer and can be reduced through diversification
- C. Both types of risk are fully eliminated by holding a single security
- D. Unsystematic risk applies only to government bonds
Show answer & explanation
Answer: B
Systematic (market) risk affects the entire market and cannot be diversified away. Unsystematic risk is specific to a particular company or industry and can be reduced by holding a diversified portfolio. Answer A reverses the two concepts.17. An investor holds common stock rather than a bond of the same corporation. In the event the company is liquidated, how does the common stockholder's claim compare to that of the bondholder?
- A. The common stockholder is paid before the bondholder
- B. The common stockholder and bondholder are paid at the same time
- C. The common stockholder has a residual claim paid only after creditors, including bondholders, are satisfied
- D. The common stockholder is guaranteed repayment of principal
Show answer & explanation
Answer: C
Common stock represents a residual ownership claim. In liquidation, creditors such as bondholders are paid before equity holders, so common stockholders are last in line and receive only what remains, if anything. This ordering is a key element of the risk difference between equity and debt.18. A bond is issued with a provision allowing the issuer to redeem it before maturity, typically when interest rates have fallen. From the investor's perspective, the PRIMARY disadvantage of this feature is:
- A. The investor must pay a penalty to keep the bond
- B. The investor may have to reinvest the returned principal at lower prevailing rates
- C. The bond's credit rating automatically drops to default
- D. The investor loses all accrued interest
Show answer & explanation
Answer: B
A call feature exposes the investor to reinvestment risk: issuers tend to call bonds when rates fall, returning principal that must then be reinvested at the lower prevailing rates, reducing future income. This is the primary drawback of a callable bond to the holder.19. A candidate is budgeting for the Series 65 exam, which covers topics including trading, customer accounts, and prohibited activities. What is the registration fee for the exam?
- A. $92
- B. $130
- C. $187
- D. $180
Show answer & explanation
Answer: C
The Series 65 exam fee is $187. The other figures are distractors drawn from unrelated exam parameters (passing score, question count, and time limit).20. A test-taker preparing for the trading and customer accounts material wants to know the total number of scored questions on the Series 65 exam. Which figure is correct?
- A. 92 scored questions
- B. 130 scored questions
- C. 180 scored questions
- D. 187 scored questions
Show answer & explanation
Answer: B
The Series 65 exam contains 130 scored questions. The other values correspond to the passing threshold, the time limit in minutes, and the fee in dollars.21. The Series 65 examination assesses knowledge across several areas, including prohibited activities. How many scored questions must a candidate answer correctly to pass?
- A. 92
- B. 130
- C. 180
- D. 187
Show answer & explanation
Answer: A
A candidate must answer at least 92 of the 130 scored questions correctly to pass the Series 65.22. How much time is allotted to complete the Series 65 examination, which includes the section on prohibited activities?
- A. 92 minutes
- B. 130 minutes
- C. 180 minutes
- D. 187 minutes
Show answer & explanation
Answer: C
Candidates are given 180 minutes to complete the Series 65 exam. The remaining options reflect the passing score, question count, and fee rather than the time limit.23. A U.S. investor buys securities denominated in a foreign currency. Even if the securities perform well in local-currency terms, the investor's realized return in U.S. dollars can be reduced by:
- A. An adverse move in the exchange rate between the foreign currency and the dollar
- B. An increase in the domestic risk-free rate only
- C. The issuer paying a higher dividend
- D. The securities becoming more liquid
Show answer & explanation
Answer: A
Currency (exchange-rate) risk arises when investments are denominated in a foreign currency. If that currency weakens against the dollar, the dollar-value of the returns falls even when the local-currency performance is positive, reducing the investor's realized return.24. A candidate is budgeting for the Series 65 exam. According to the exam's official information, what is the registration cost to sit for the exam?
- A. $92
- B. $130
- C. $180
- D. $187
Show answer & explanation
Answer: D
The published cost to register for the Series 65 exam is $187. The other figures are distractors drawn from unrelated exam parameters (question count, passing threshold, and time limit) rather than the fee.25. A candidate has exactly three hours available on the day of testing. How does this compare to the time officially allotted for the Series 65 exam?
- A. It is 20 minutes less than the allotted time
- B. It is exactly equal to the allotted time
- C. It is 20 minutes more than the allotted time
- D. It is 60 minutes more than the allotted time
Show answer & explanation
Answer: B
The Series 65 allots 180 minutes to complete the exam, and three hours equals 180 minutes, so the two are exactly equal. This is a reasoning step over the stated duration, not a new figure.26. Based on the official passing standard, what is the minimum passing percentage a candidate must achieve on the Series 65 scored questions?
- A. Approximately 65%
- B. Approximately 71%
- C. Approximately 80%
- D. Approximately 92%
Show answer & explanation
Answer: B
The passing standard is 92 of 130 scored questions. Dividing 92 by 130 yields roughly 0.708, or about 71%. Choice D confuses the raw passing count (92) with a percentage, which is a common error.27. Which of the following correctly pairs a Series 65 exam parameter with its official value?
- A. Time limit — 130 minutes
- B. Passing score — 92 of 130 scored questions
- C. Registration fee — $180
- D. Number of scored questions — 187
Show answer & explanation
Answer: B
Only choice B is correctly matched: the passing score is 92 of 130 scored questions. The time limit is 180 minutes (not 130), the fee is $187 (not $180), and there are 130 scored questions (not 187). The incorrect options deliberately swap values among the exam parameters.28. To pass the Series 65, a candidate must correctly answer at least how many of the scored questions?
- A. At least 65 of the 130 scored questions
- B. At least 92 of the 130 scored questions
- C. At least 118 of the 130 scored questions
- D. At least 130 of the 130 scored questions
Show answer & explanation
Answer: B
The passing standard for the Series 65 is at least 92 of the 130 scored questions answered correctly. The other options are plausible-looking fractions that do not match the published passing count.29. Two candidates each pay the standard Series 65 registration fee. What is their combined total outlay for the exam fee alone?
- A. $260
- B. $358
- C. $374
- D. $500
Show answer & explanation
Answer: C
The standard Series 65 fee is $187 per candidate. For two candidates, 187 multiplied by 2 equals $374. This total is reasoned from the stated per-candidate fee.30. If a candidate uses the full time allowed for the Series 65 and answers all scored questions, approximately how much time is available on average per scored question?
- A. About 0.7 minutes per question
- B. About 1.4 minutes per question
- C. About 2.5 minutes per question
- D. About 3.0 minutes per question
Show answer & explanation
Answer: B
With 180 minutes available for 130 scored questions, dividing 180 by 130 gives roughly 1.38 minutes per question, or about 1.4 minutes each. This is derived by reasoning over the stated duration and question count.31. A candidate answers 90 of the 130 scored questions correctly on the Series 65. Relative to the passing standard, what is the result?
- A. The candidate passes with room to spare
- B. The candidate passes exactly at the cutoff
- C. The candidate fails, falling 2 questions short
- D. The candidate fails, falling 12 questions short
Show answer & explanation
Answer: C
Passing requires at least 92 correct of 130. A score of 90 correct is 2 below the 92-question cutoff, so the candidate fails by 2 questions. This is a reasoning step over the published passing count.32. How many scored questions can a candidate miss on the Series 65 and still meet the minimum passing standard?
- A. Up to 12 questions
- B. Up to 38 questions
- C. Up to 48 questions
- D. Up to 92 questions
Show answer & explanation
Answer: B
With 130 scored questions and a passing standard of 92 correct, a candidate may miss at most 130 minus 92, which equals 38 questions, and still pass. This is derived by subtracting the passing count from the total.33. A client is concerned that a bond issuer might fail to make scheduled interest or principal payments. Which type of risk is the client describing?
- A. Purchasing-power risk
- B. Liquidity risk
- C. Credit (default) risk
- D. Reinvestment risk
Show answer & explanation
Answer: C
Credit risk, also called default risk, is the possibility that the issuer will not meet its obligation to pay interest or repay principal. It is distinct from purchasing-power, liquidity, and reinvestment risk, which describe other exposures.34. A candidate answers 91 of the 130 scored questions correctly on the Series 65 exam. Based on the passing standard, what is the outcome?
- A. The candidate passes, because 91 exceeds the required minimum.
- B. The candidate fails, because the minimum required is at least 92 correct.
- C. The candidate passes, because any score above 90 is sufficient.
- D. The result is pending until pretest questions are scored.
Show answer & explanation
Answer: B
A passing result requires at least 92 of the 130 scored questions answered correctly. Because 91 is below that threshold, the candidate does not pass. This is an inference applying the stated passing standard to a specific score.35. Which statement about the Series 65 exam's passing standard, relevant to any candidate studying prohibited activities, is accurate?
- A. A candidate must answer at least 92 of the 130 scored questions correctly.
- B. A candidate must answer at least 130 of the 187 scored questions correctly.
- C. A candidate must answer at least 92 of the 180 scored questions correctly.
- D. A candidate must answer at least 180 of the 187 scored questions correctly.
Show answer & explanation
Answer: A
The passing standard requires at least 92 of the 130 scored questions answered correctly. The other options substitute the time limit or fee for the question count or threshold.36. A candidate has 180 minutes to answer 130 scored questions. On average, about how much time is available per scored question?
- A. About 0.7 minutes
- B. About 1.4 minutes
- C. About 2.5 minutes
- D. About 3.6 minutes
Show answer & explanation
Answer: B
Dividing 180 minutes by 130 scored questions gives approximately 1.38 minutes per question, which rounds to about 1.4 minutes. This is an average pacing figure derived from the total time and question count.37. Assuming time is divided evenly across all scored questions, approximately how many minutes are available per scored question on the Series 65 exam?
- A. About 0.7 minutes per question
- B. About 1.4 minutes per question
- C. About 2.5 minutes per question
- D. About 3.6 minutes per question
Show answer & explanation
Answer: B
Dividing 180 minutes by 130 scored questions yields approximately 1.4 minutes per question. This is an inference derived from the stated time limit and question count.38. A candidate scores 90 correct out of 130 scored questions on the Series 65 exam. What is the result?
- A. Pass, because 90 is above half of 130.
- B. Fail, because the minimum required is 92 correct answers.
- C. Pass, because the fee of $187 was paid.
- D. Pass, because the exam was within the 180-minute limit.
Show answer & explanation
Answer: B
The minimum passing standard is 92 of 130 scored questions correct. A score of 90 falls two questions short of that minimum, so the candidate fails. Payment of the fee and staying within the time limit are prerequisites to sitting the exam, not substitutes for the passing score.39. A candidate answers 92 of the 130 scored questions correctly. What is the outcome?
- A. The candidate fails, because 92 is below the required minimum.
- B. The candidate passes, because 92 meets the required minimum of correct answers.
- C. The result is inconclusive and requires a retest.
- D. The candidate passes only if the exam was completed under 180 minutes.
Show answer & explanation
Answer: B
The passing standard is at least 92 of the 130 scored questions correct. Scoring exactly 92 meets that minimum, so the candidate passes. The time limit governs how long the candidate may take, not whether a qualifying score passes.