STUDY FOR THE SERIES 66 EXAM

Taking the Series 66 exam soon? Make sure that you are familiar with the four common ways of valuing equity securities. NASAA's Series 66 Test Specifications lists these methods in Section II (B) (1-4), so you can reasonably expect to see questions on these methods on the actual Series 66 exam. Bob Eder covers Valuing Equity Securities in his  Study for the Series 66 Exam . Here is a sample of Bob Eder's treatment: Discounted Cash Flow (DCF)                                                                                      II (B) (4) Discounted Cash Flow considers all expe...

NASAA publishes Test Specifications for the Series 66 exam, and it includes in Section II (B) (1-4) Methods of Valuing Equity Securities. These include technical analysis, fundamental analysis, dividend discount, and discounted cash flow. NASAA indicates that the Series 66 exam contains three questions. If you are going to sit for the Series 66, make sure that you know how dividend discount and discounted cash flow work. Bob Eder discusses equity valuation methods on pages 52-53 of  his Series 66 study manual,  Study for the Series 66 Exam . Here is a sample of Bob Eder's treatment of the dividend discount model : EXAMPLE OF DIVIDEND DISCOUNT MODEL ABC Corp. stock paid an annual dividend of $3.30 last year. Today, ABC announces that it will boost its dividend by eight percent for the coming year. Joe tries to earn 12 percent on his money. To find the price based on the dividend discount model, divide this year's expected dividend of $3.56 ($3.30 multiplied by 1.08) by the d...