Series 65 Exam Vocabulary You Should Know

🧠 Series 65 Exam Vocabulary You Should Know

Mastering the Series 65 Exam requires more than understanding concepts—it demands fluency in the language of regulation, investing, and client advisory services. This curated list highlights essential terms that frequently appear on the exam, helping you read questions faster, avoid confusion, and boost your score.

📘 Core Regulatory Terms

• Fiduciary Duty – The obligation to act in the best interest of the client at all times
• State Administrator – The state-level securities regulator with jurisdiction over securities and firms
• Investment Adviser (IA) – A person or firm providing investment advice for compensation
• Investment Adviser Representative (IAR) – An individual who represents an IA and gives advice directly to clients
• Broker-Dealer (BD) – A firm that buys/sells securities for itself or others; must register with FINRA
• Form ADV – A required disclosure form for investment advisers, detailing services, fees, and potential conflicts
• Uniform Securities Act (USA) – Model legislation guiding state securities regulation

📊 Investment Vehicles and Strategies

• UIT (Unit Investment Trust) – A fixed portfolio of securities, not actively managed
• ETF (Exchange-Traded Fund) – A marketable security tracking an index, commodity, or sector
• REIT (Real Estate Investment Trust) – A company that owns or finances income-producing real estate
• Alpha – A measure of performance on a risk-adjusted basis
• Beta – A measure of volatility relative to the market
• Duration – A bond’s sensitivity to interest rate changes
• Modern Portfolio Theory (MPT) – A strategy focused on maximizing returns for a given level of risk

💡 Economic and Financial Concepts

• Monetary Policy – Central bank actions (e.g., the Fed) that control the money supply and interest rates
• Fiscal Policy – Government use of spending and taxation to influence the economy
• CPI (Consumer Price Index) – Measures inflation by tracking the prices of a standard basket of goods
• GDP (Gross Domestic Product) – Total value of goods and services produced in an economy
• Yield Curve – A graph that shows interest rates across different bond maturities

📑 Ethics and Disclosure

• Soft Dollar Arrangements – Compensation from brokerage firms to advisers for research or services
• Discretionary Authority – Allows the adviser to place trades without prior client approval
• Custody – Having direct or indirect control over client funds or securities
• Churning – Excessive trading in a client account for the purpose of generating commissions
• Misrepresentation – False or misleading statements about a security or strategy
• Material Fact – Information that could affect a client’s decision-making

📈 Suitability and Client Recommendations

• Risk Tolerance – A client’s capacity and willingness to take on investment risk
• Time Horizon – The expected time before a client needs access to their investment capital
• Total Return – The overall return from interest, dividends, and capital appreciation
• Tax Equivalent Yield – Adjusts municipal bond yields for comparison with taxable investments
• Net Present Value (NPV) – The current value of future cash flows minus the initial investment

📝 Study Tip

Flashcards are highly effective for vocabulary review. Focus especially on terms related to regulation, ethics, suitability, and investment vehicles, as these appear frequently in both direct and scenario-based questions.

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