7 Series 65 Practice Exam Questions + Answers

Over 12,000 candidates sit for the Series 65 exam every year, but only about 65-70% pass on the first try.

Think you’re ready for the Series 65?

I gathered these seven practice questions to test what you know (and help you spot what you don’t). Each one mimics the actual exam in structure and content, touching on important topics like investment recommendations, fiduciary responsibilities, economic factors, and client suitability. As you go through them, check your answers and use my explanations to tighten the screws on your prep strategy.

Key Takeaways

• Practice Makes Perfect: Series 65 practice exam questions are designed to mirror actual test content, helping you understand client investment recommendations, economic factors, investment vehicle characteristics, and much more.
• Know Your Numbers: You’ll need to know how to evaluate equity securities, apply fundamental analysis, and understand the impact of the inflation rate on investment returns.
• Ethics Are Tested: Expect scenarios that test your ability to spot unethical business practices, especially when acting as an investment adviser representative.
• Break It Down: Success on the Series 65 practice test comes from breaking complicated subjects into easily understandable concepts.
• Think Like the Fed: An excellent grasp of economic factors and monetary policy will help you answer questions involving the Federal Reserve, interest rates, and client suitability.

Question 1

A custodial account for a minor holds 500 shares of BNM stock. BNM is issuing new shares to fund a factory project. Each existing share receives one right, and it takes two rights plus $28 to buy one new share. BNM is currently trading at $30 per share. Which of the following actions may the custodian take?

• I. Sell the rights at their intrinsic value
• II. Sell the rights at a premium over intrinsic value
• III. Sell the rights below the intrinsic value
• IV. Use the rights to buy additional shares

A. II & IV

B. I, II & III

C. IV only

D. I, II, III & IV

✅ Correct answer: D. I, II, III & IV

The custodian may take any of these actions as long as they act in the best interest of the minor. That includes selling rights at intrinsic value, selling at a premium or discount (market conditions may dictate this), and using the rights to purchase more shares. No option is automatically prohibited.

Question 2

The dividend discount model is primarily used to estimate which of the following?

A. A stock’s fair market value

B. A company’s PEG ratio

C. Annualized current yield

D. Total return over a holding period

✅ Correct answer: A. A stock’s fair market value

The dividend discount model (DDM) estimates a stock’s fair market value by calculating the present value of its expected future dividends. It does this by discounting those predicted dividends back to today’s dollars.

Question 3

An investor placed $5,000 in a growth fund a decade ago. The investment has doubled and is now worth $10,000. What was the investor’s approximate annual rate of return?

A. 6%

B. 11%

C. 7.2%

D. 9.1%

✅ Correct answer: C. 7.2%

This is based on the Rule of 72, a shortcut to estimate how long it takes an investment that grows to twice its original value at a fixed annual rate. Using the rule:

72÷10 years=7.2%72 ÷ 10 \text{ years} = 7.2\%72÷10 years=7.2%

Question 4

An investor bought 1,000 shares of XYZ at $40 each one year ago. They received four quarterly dividends of $0.50 per share and sold the stock for $38 per share. What is the investor’s total return?

A. 10%

B. 2.5%

C. 5%

D. 0%

✅ Correct answer: D. 0%

Let’s break it down:

• Purchase price: 1,000 shares × $40 = $40,000
• Sale price: 1,000 shares × $38 = $38,000 → $2,000 loss
• Dividends received: $0.50 × 4 quarters × 1,000 shares = $2,000 gain

Total return = (Dividends + Capital Gain) ÷ Initial Investment

Question 5

An investor wants to accumulate $100,000 over five years to purchase a second home and plans to invest a lump sum today. To calculate the amount they must deposit now, all of the following are needed except:

A. Present value of $100,000

B. Number of compounding periods

C. Interest rate

D. Future value of $100,000

✅ Correct answer: A. Present value of $100,000

To calculate the present value, you need the future value ($100,000), the interest rate, and a number of compounding periods. But you do not need the present value to calculate the present value—that’s what you’re solving for.

Question 6

Why might the internal rate of return (IRR) be a poor choice for evaluating a common stock investment?

A. Stock prices change too frequently

B. Common stock has no set maturity date

C. Issuing new shares can dilute ownership

D. Preferred stock has senior claims over equity

✅ Correct answer: B. Common stock has no set maturity date

IRR is best suited for investments with predictable cash flows and a definite time horizon. Since common stock doesn’t have a set maturity date and future cash flows (like dividends or sale price) are uncertain, IRR isn’t a reliable evaluation tool for it.

Question 7

The Federal Open Market Committee (FOMC) is shrinking its balance sheet due to monetary tightening. What are the likely effects?

• I. Interest rates rise
• II. Money supply contracts
• III. Interest rates fall
• IV. Money supply expands

A. I & II

B. II & III

C. II & IV

D. I only

✅ Correct answer: A. I & II

When the FOMC shrinks its balance sheet (also known as quantitative tightening), it does so by letting bonds mature or selling assets. This reduces the amount of money in the financial system.

Likely effects: interest rates rise (less liquidity = higher borrowing costs) and money supply contracts (fewer reserves in the banking system).

My Best Series 65 Prep Tips

Some Series 65 practice questions may look incredibly simple, but don’t be fooled. They barely skim the surface of what’s on the Series 65 exam. These are my most effective strategies for building your confidence and passing with flying colors.

👉 Start Early With the Toughest Topics

Give yourself at least 6–8 weeks to cover the full exam. There are people who spend upwards of a year studying.

Begin with areas that call for deeper understanding, like fundamental analysis, unethical business practices, retirement plans, and cash equivalents. And don’t wait until the final weeks to start on equity securities or the finer points of investment adviser representative responsibilities.

👉 Use an Online Series 65 Course

A balanced online Series 65 prep course breaks down difficult materials into easily understandable concepts. A good platform will include video lessons, Series 65 practice questions, and study tools to track your test score progress. Plus, there are courses that offer a refund on their materials if you don’t pass, like the Securities Institute of America.

👉 Stick to a Structured Study Calendar

Plan out each day by topic if that’s easiest for you. Make time for quizzes, review, and at least 2–3 full-length practice tests. Keep in mind the actual exam has 130 scored questions plus unscored questions, all within a strict time limit.

👉 Focus on Active Learning, Not Just Reading

Most people don’t retain all of the information they read in a textbook. Humans are visual, interactive creatures. Our brains need stimulation to remember.

Create flashcards on investment adviser roles, sketch diagrams comparing broker-dealers and FINRA member firms, and quiz yourself on how inflation rate shifts affect stock and bond price trends. Practicing how to correctly answer questions under pressure is also major.

👉 Take Full-Length Series 65 Practice Exams

Take several full (and timed) Series 65 practice exams. This will highlight any weaker areas in your knowledge and help you build some test-taking stamina. Realistic exam content helps you understand how many questions will focus on topics like business information, client income goals, and the value of following investments like company stock or other assets.

👉 Track Progress and Adjust as Needed

Monitor your test score growth and refocus on areas that need work. Whether it’s memorizing regulations, understanding tax treatment on investments, or clarifying the role of an investment adviser representative, continuous review will help you feel ready.

Final Verdict

Preparing for the Series 65 exam can feel scary, but every hour of focused effort gets you a step closer to becoming a licensed investment adviser representative. Stick with your study plan, keep reviewing practice questions, and trust that your hard work will pay off. You’re building the foundation to give smart, ethical client investment recommendations, and that’s something to be proud of!

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