STUDY FOR THE SERIES 66 EXAM

The Content Outline and Study Guide for the Series 66 exam indicates that the Series 66 test contains five questions on the evaluation of pooled investment vehicles. Consequently, this is a section that candidates should study before going in and sitting for the Series 66. Here's an example of what the Series 66 exam asks about—share classes. Can you differentiate between the various share classes of many mutual funds, such as Class A, B, and C? Class A indicates a front-end load. The NASD has put maximum limits on this front-end charge to 8.50 percent, but most front-end load funds abide by their own maximum of 5.75 percent. Class B shares indicate that there is a contingent deferred sales charge (CDSC) that is applied if a shareholder redeems his/her shares within a period of years, usually seven years. Class  C shares indicate that the mutual fund has an asset-based charge that is taken out and computed on a daily basis. FINRA limits this asset-based charge to 75 basis p

In order to take the Series 66 exam, you must either have passed the Series 7 or else you plan to sit for it shortly. Some of the material asked on the Series 66 duplicates material in the Series 7. However, a candidate for the Series 66 may be a bit rusty on some of these Series 7 subjects. But here they are again—for example, how to value bonds and fixed income securities. Under Section II of the Content Outline  entitled  Investment Vehicle Characteristics   for the Series 66, there are 20 questions, of which five are on fixed income securities. Included in the material for these five questions is "conversion valuation," referring to convertible bonds. So, do you know the difference between conversion ratio and conversion price? Suppose the Series 66 asks for the difference between parity price and conversion price. Do you know the meaning of these terms and how they differ one from the other? Lastly, suppose the Series 66 asks about parity price of the bond. How do