Study for the Series 65 Exam: Investment Adviser Representative

by Bob Eder

investment adviser representatives.

North American Securities Administrators Association (NASAA),

four primary areas: (1) economic factors and business information; (2) characteristics of investment vehicles; (3) investment recommendations and strategies for clients; and (4) laws, regulations, and guidelines,...

(www.nasaa.org/industry resou...

Link

On the other hand, the Series 66 is designed for those applicants who already have a Series 7 license, or who plan to take the Series 7 in the near future.

After you have submitted a U-4 application to FINRA and paid the appropriate fee, $165 for the Series 65, FINRA will notify you of your 120-day window.

Chained CPI (C-CPI),

Chained CPI (generics) accts for cheaper alternatives, so its increase is less than inflated CPI

(GDP)

Total savings (investment) and spending of consumers and govt over one year- Health of the economy

GDP gives an indication of the economic well-being and productivity of the U.S. It indicates the value of goods produced in a country during a year.

GDP givesthe total value of goods consumed, amount of investment or savings, and spe...

When we adjust GDP for inflation, we convert nominal GDP into real GDP, and express it in “real dollars” (i.e., the real value of the dollar after inflation).

BALANCE OF TRADE

Export sales minus import expense

BALANCE OF PAYMENTS (BOP)

Trade balance plus net cash flow=All revenue into country minus all expense out

LEADING INDICATORS These are certain events or happenings which predict the future state of the economy.

New Business Formations

Plant And Equipmen...

New Building ...

COINCIDENT INDICATORS

Industrial Production

Non-Farm Personal...

Manufacturing And Tra...

FEDERAL RESERVE BANK The Federal Reserve Bank (the Fed) is the central bank of the United States. It was set up by the Federal Reserve Act of 1913. The Fed controls monetary policy, setting targets for money supply and interest rates. There are 12 Federal Reserve Banks throughout the country. The Fed tries to maintain stable prices, achieve maximum employment, and control interest rates. These are its primary goals.

MONEY SUPPLY

M1 Includes currency in circulation plus demand or checking deposits, plus NOW accounts is...

M2 Includes M1, plus savings accounts (time deposits), certificates of deposit less than $100,000, and money market mutual fund shares(MMMFS). M2 does not include j...

11 Federal Reserve Banks.

12 Fed Res Banks total

FOMC Creates Money

Greater money supply means cheaper money (lower interest rates)

When the Fed pays money for the purchase of Government “paper” (i.e., U.S. government bonds, notes, and bills), this action increases money supply, and increases or “loosens” the money supply. If...

action drains reserves out of the system, and decreases or "tightens" the money supply.

Discount Rate

Fed rate to member banks

Prime Rate Vs. Discount Rate The discount rate is different from the prime rate. The prime rate is what banks charge their creditworthy customers. The discount rate is what the Fed charges its member banks for very short-term loans. Both should be distinguished from the “call money rate” or “brokers loan rate,” the rate banks charge brokerage firms for loans collateralized by securities. The discount rate is the least volatile of all short-term rates, changing only now and then. Fed Funds Rate The most volatile is the “federal funds rate,” charged by banks for overnight borrowing. Banks are constantly borrowing from and lending to other banks. Banks charge or pay the fed funds rate for these...

Another name for the call money rate is the “brokers loan rate,” the rate that banks charge for loans to brokerage firms, which put up securities as collateral.

Regulation T, U and X are regulations used by the Fed as tools to limit or restrict credit on the

purchase of securities.

TUX- brokerage loan customers, bank loan customers, borrower truth about unencumbered collateral

Regulation T

Brokerage margin requirements

Regulation U Thisregulation controls credit extended by banksto customersto purchase securities. Regulation X This regulation obliges a borrower, making a loan application, to tell the truth about the purpose of the loan, especially ...

Banks margin requirement

Moral Suasion This is an indirect tool of the Fed, because it is simply a statement on the part of the Fed on what it would prefer to see happen with the federal funds rate. There is no overt iron glove behind a statement of its wishes. However, there may be covert forces inv...

FISCAL POLICY The budget for the United States is set by Congress. Congress decides how much to spend on defense, education, and other workings of the federal government. This i...

Monetary policy is set by the Fed. Fiscal policy is ...

ECONOMIC TERMS

Stagflation A combination of inflation together with a stagnating economy. It happens when prices are rising, yet people are losing their jobs.

Recession A downturn in the economy lasting for at least two consecutive quarters.

Keynesian Economics

government spending often is necessary to stimulate and co...

Depression A downturn in the economy lasting for two consecutive years. A depression is much more severe than a recession.

Supply Side Economics Thistheory says that the economy would prosper if government cuts spending, reduces taxes, and stops interfering.

Chapter,

BALANCE SHEET

FUNDAMENTAL EQUATION Assets minus liabilities equals net worth. This is the fundamental equa...

In the case of a corporation which has issued stock, Net Worth equals Stockholders Equity. Therefore, we can say the following: assets minus ...