STUDY FOR THE SERIES 66 EXAM

Taking the Series 66 in the near future? If so, be prepared to answer questions on and about Standard Deviation. How do I know this? I know this because NASAA's Series 66 Test Specifications indicate in Section I (A) (2) that you as a test candidate should be familiar with Standard Deviation. Here is a example of a question asking you to solve for standard deviation: PRACTICE QUESTION Professor Mayer has only five students in his finance class. On a weekly 10-question quiz dealing with unethical practices, the scores are 10, 8.5, 3, 6 and 7.5. Which of the following is the standard deviation for these scores? a.                     1.253 b.                     2.387 c.                      3.457 d. ...

   Taking the Series 66 exam? If so, be prepared for questions covering the Sharpe Ratio and various other descriptive statistics that analyze the price action of stocks. How do I know this? NASAA publishes Test Specifications for the Series 66 exam, and Section I (A) (2) covers the Sharpe Ratio and other analytical ratios and concepts. Bob Eder discusses the Sharpe Ratio and stock statistical analysis in his  Study for the Series 66 Exam . Here is an example of Bob Eder's treatment of the Sharpe Ratio: EXAMPLE Jimmy compares shares of ABC Corp. with shares of XYZ Corp. The standard deviation of XYZ's historical returns is 5, but the standard deviation of ABC shares is 3. If both ABC and XYZ generate an annual return of 30 percent above risk-free return, ABC has a Sharpe Ratio of 10 (i.e., 30 percent divided by 3). XYZ stock has a Sharpe Ratio of 6 (i.e., 30 percent divided by 5). ABC's higher Sharpe Ratio indicates ABC's return is less risky than that of XYZ. Jimmy thu...

The Series 66 exam is designed for those candidates who have already passed the Series 7 general securities exam, or for those who intend to sit for the Series 7 shortly. However, if you are thinking of sitting for the Series 66 exam, don't think that because you have a Series 7 this exam will be a piece of cake. Why do I say this? Because consider the topics contained in the Series 66 Test Specifications put out by NASAA, the creator of the exam. Section I (A) (2) discusses descriptive statistics, including mean, median, mode, range, standard deviation, alpha, beta, and the Sharpe ratio. Therefore, don't go into the test without being adequately prepared. Bob Eder's study text, Study for the Series 66 Exam , has a full treatment of descriptive statistics and the topics included, as mentioned above, in its Chapter 1, entitled Economic Analysis. For example, Study for the Series 66 Exam discusses standard deviation, and gives an example how to calculate it, then follows...