Are flashcards effective for the Series 65 exam?

Yes. Flashcards use active recall — retrieving an answer from memory — which research shows is one of the most effective ways to make information stick, especially in short sessions over several days.

What topics do the Series 65 flashcards cover?

All four NASAA content areas: economic factors and business information; investment vehicle characteristics; client investment recommendations and strategies; and laws, regulations, and ethics.

How should I study with these flashcards?

Mix the modes: flip to learn, type to test recall, match for speed, and quiz to check yourself. Spend the most time on client strategies and the law sections — together they are 60% of the exam.

Are the Series 65 flashcards free?

Yes — 100% free, all four study modes, no paywall and no sign-up.

The recurring fluctuation of economic activity through four phases — expansion, peak, contraction, and trough — measured from the start of one recession to the start of the next.

What are the four phases of the business cycle, in order?

Expansion (upward) to peak to contraction (downward) to trough (low point before recovery).

A significant, broad decline in economic activity lasting more than a few months. The NBER dates U.S. recessions using several measures of activity, not real GDP alone.

Who officially dates U.S. recessions?

The NBER (National Bureau of Economic Research), using a variety of measures of economic activity, not just real GDP.

The interest rate banks charge one another for overnight loans of reserves. The FOMC sets a target range for it; its level influences other short-term rates across the economy.

Open market operations

The Federal Reserve's main monetary tool — buying securities to add reserves and lower rates (easing), or selling securities to drain reserves and raise rates (tightening).

What is the Federal Reserve's primary monetary policy tool?

Open market operations — the purchase and sale of securities in the open market to influence the federal funds rate and money supply.

The rate the Federal Reserve charges depository institutions that borrow directly from its discount window. The primary-credit rate is set above the top of the federal funds target range.

What are the three Federal Reserve discount window programs?

Primary credit (sound institutions), secondary credit (rate higher than primary), and seasonal credit (smaller institutions with seasonal swings).

What is the current Federal Reserve reserve requirement ratio?

Zero percent across all deposit liability types, effective March 26, 2020. The Fed eliminated reserve requirements for all depository institutions.

What is the Federal Reserve's dual mandate?

Maximum employment and stable prices (controlled inflation). These are the two goals set by the Federal Reserve Act.

What inflation rate does the FOMC target, and by which measure?

2 percent per year, as measured by the annual change in the price index for personal consumption expenditures (PCE).

Federal Open Market Committee (FOMC)

The Federal Reserve body that sets the target for the federal funds rate. It holds eight regularly scheduled meetings each year.

Government use of spending and taxation (set by Congress and the President) to influence the economy — distinct from monetary policy, which the Federal Reserve controls.

What is a budget deficit vs. a budget surplus?

A deficit occurs when the government spends more than it collects in revenue; a surplus occurs when it spends less than it collects.

Currency outside the Treasury, Fed Banks, and depository-institution vaults; demand deposits at commercial banks; and other liquid deposits.

M1 plus small-denomination time deposits (under $100,000) and balances in retail money market funds.

A general upward movement of prices. Inflation reduces purchasing power, which is a risk for investors receiving a fixed rate of interest.

The amount of goods and services that can be purchased by a given unit of currency, taking into account the effect of inflation.

GDP (Gross Domestic Product)

The value of the final goods and services produced in the United States. Real (chained) GDP is adjusted to remove the effects of inflation so different periods can be compared.

Real GDP vs. nominal GDP

Nominal (current-dollar) GDP uses market prices of the measured period; real (chained) GDP is adjusted to remove the effects of inflation over time.

CPI (Consumer Price Index)

A measure of the average change over time in prices paid by consumers for a representative basket of goods and services. It is the most widely used measure of inflation.

What is the difference between CPI-U and CPI-W?

Population coverage only. CPI-U covers all urban consumers (over 90% of population); CPI-W covers urban wage earners and clerical workers (about 30%).

The Federal Reserve's preferred inflation gauge. Core PCE excludes consumer energy prices and many food prices.

Treasury (par) yield curve

A curve relating the par yield on a security to its time to maturity, based on closing market bid prices of the most recently auctioned Treasury securities.

A financial statement that shows what a company owns and what it owes at a fixed point in time.

A financial statement that shows how much money a company made and spent over a period.

Statement of cash flows

One of the audited statements in the 10-K; it shows the cash flowing into and out of a company over a period.

The money left over if a company paid its current liabilities (debts due within one year) from its current assets.

Generally Accepted Accounting Principles — the standards U.S. companies are required to follow in presenting their financial statements.

A company's annual report. Its Financial Statements section contains the audited income statement, balance sheets, statement of cash flows, and statement of stockholders' equity.

What is the debt-to-equity ratio?

Total Liabilities divided by Shareholders' Equity. A 2-to-1 ratio means two dollars of debt for every one dollar shareholders invest.

What is the P/E ratio?

Stock price divided by earnings per share (EPS).

What is the inventory turnover ratio?

Cost of sales divided by average inventory for the period.

What is the current ratio?

Current assets divided by current liabilities. Desirable ratios vary by industry.

Interest earned on both the principal and the accumulated interest, allowing money to grow faster over time than with simple interest.

Risk (general definition)

The degree of uncertainty about the rate of return on an asset and the potential harm that could arise when financial returns are not what the investor expected.

Market-wide risk that diversification cannot remove — market, interest-rate, inflation (purchasing-power), currency, and political/regulatory risk.

Risk specific to one company, industry, or security — business, credit (default), and liquidity risk. It can be reduced by diversification.

Which type of risk can diversification reduce?

Unsystematic (specific/diversifiable) risk. Systematic (market) risk cannot be diversified away.

The risk tied to a company staying in business. If a company fails, common stockholders are last in line for the proceeds of its assets.

Inflation risk (purchasing-power risk)

The risk that inflation reduces purchasing power — a particular concern for investors receiving a fixed rate of interest.

The risk that interest rate changes affect a bond's value. Rising rates make new bonds more attractive, forcing older bonds to sell at a discount.

The risk that investors won't find a market for their securities, potentially preventing them from buying or selling when they want.

Credit (default) risk

The risk of an issuer defaulting on interest or principal payments. Lower-rated and high-yield (junk) bonds carry greater credit risk than higher-rated bonds.

Diversification (risk mitigation)

Investing across multiple industries to dilute the risk caused by trends or events in any particular industry, reducing unsystematic risk.

Your FREE Series 65 Flashcards 2026 – 200+ Cards

Realistic, NASAA exam-style flashcards — flip, match, type, and quiz yourself.

Master cards to boost your scoreMaster cards to raise your exam readiness score

How well do you know them?

Series 65 Flashcards

Business cycle: The recurring fluctuation of economic activity through four phases — expansion, peak, contraction, and trough — measured from the start of one recession to the start of the next.
What are the four phases of the business cycle, in order?: Expansion (upward) to peak to contraction (downward) to trough (low point before recovery).
Recession: A significant, broad decline in economic activity lasting more than a few months. The NBER dates U.S. recessions using several measures of activity, not real GDP alone.
Who officially dates U.S. recessions?: The NBER (National Bureau of Economic Research), using a variety of measures of economic activity, not just real GDP.
Federal funds rate: The interest rate banks charge one another for overnight loans of reserves. The FOMC sets a target range for it; its level influences other short-term rates across the economy.
Open market operations: The Federal Reserve's main monetary tool — buying securities to add reserves and lower rates (easing), or selling securities to drain reserves and raise rates (tightening).
What is the Federal Reserve's primary monetary policy tool?: Open market operations — the purchase and sale of securities in the open market to influence the federal funds rate and money supply.
Discount rate: The rate the Federal Reserve charges depository institutions that borrow directly from its discount window. The primary-credit rate is set above the top of the federal funds target range.
What are the three Federal Reserve discount window programs?: Primary credit (sound institutions), secondary credit (rate higher than primary), and seasonal credit (smaller institutions with seasonal swings).
What is the current Federal Reserve reserve requirement ratio?: Zero percent across all deposit liability types, effective March 26, 2020. The Fed eliminated reserve requirements for all depository institutions.
What is the Federal Reserve's dual mandate?: Maximum employment and stable prices (controlled inflation). These are the two goals set by the Federal Reserve Act.
What inflation rate does the FOMC target, and by which measure?: 2 percent per year, as measured by the annual change in the price index for personal consumption expenditures (PCE).
Federal Open Market Committee (FOMC): The Federal Reserve body that sets the target for the federal funds rate. It holds eight regularly scheduled meetings each year.
Fiscal policy: Government use of spending and taxation (set by Congress and the President) to influence the economy — distinct from monetary policy, which the Federal Reserve controls.
What is a budget deficit vs. a budget surplus?: A deficit occurs when the government spends more than it collects in revenue; a surplus occurs when it spends less than it collects.
M1 money supply: Currency outside the Treasury, Fed Banks, and depository-institution vaults; demand deposits at commercial banks; and other liquid deposits.
M2 money supply: M1 plus small-denomination time deposits (under $100,000) and balances in retail money market funds.
Inflation: A general upward movement of prices. Inflation reduces purchasing power, which is a risk for investors receiving a fixed rate of interest.
Purchasing power: The amount of goods and services that can be purchased by a given unit of currency, taking into account the effect of inflation.
GDP (Gross Domestic Product): The value of the final goods and services produced in the United States. Real (chained) GDP is adjusted to remove the effects of inflation so different periods can be compared.
Real GDP vs. nominal GDP: Nominal (current-dollar) GDP uses market prices of the measured period; real (chained) GDP is adjusted to remove the effects of inflation over time.
CPI (Consumer Price Index): A measure of the average change over time in prices paid by consumers for a representative basket of goods and services. It is the most widely used measure of inflation.
What is the difference between CPI-U and CPI-W?: Population coverage only. CPI-U covers all urban consumers (over 90% of population); CPI-W covers urban wage earners and clerical workers (about 30%).
PCE price index: The Federal Reserve's preferred inflation gauge. Core PCE excludes consumer energy prices and many food prices.
Treasury (par) yield curve: A curve relating the par yield on a security to its time to maturity, based on closing market bid prices of the most recently auctioned Treasury securities.
Balance sheet: A financial statement that shows what a company owns and what it owes at a fixed point in time.
Income statement: A financial statement that shows how much money a company made and spent over a period.
Statement of cash flows: One of the audited statements in the 10-K; it shows the cash flowing into and out of a company over a period.
Working capital: The money left over if a company paid its current liabilities (debts due within one year) from its current assets.
GAAP: Generally Accepted Accounting Principles — the standards U.S. companies are required to follow in presenting their financial statements.
10-K: A company's annual report. Its Financial Statements section contains the audited income statement, balance sheets, statement of cash flows, and statement of stockholders' equity.
What is the debt-to-equity ratio?: Total Liabilities divided by Shareholders' Equity. A 2-to-1 ratio means two dollars of debt for every one dollar shareholders invest.
What is the P/E ratio?: Stock price divided by earnings per share (EPS).
What is the inventory turnover ratio?: Cost of sales divided by average inventory for the period.
What is the current ratio?: Current assets divided by current liabilities. Desirable ratios vary by industry.
Compound interest: Interest earned on both the principal and the accumulated interest, allowing money to grow faster over time than with simple interest.
Risk (general definition): The degree of uncertainty about the rate of return on an asset and the potential harm that could arise when financial returns are not what the investor expected.
Systematic risk: Market-wide risk that diversification cannot remove — market, interest-rate, inflation (purchasing-power), currency, and political/regulatory risk.
Unsystematic risk: Risk specific to one company, industry, or security — business, credit (default), and liquidity risk. It can be reduced by diversification.
Which type of risk can diversification reduce?: Unsystematic (specific/diversifiable) risk. Systematic (market) risk cannot be diversified away.
Business risk: The risk tied to a company staying in business. If a company fails, common stockholders are last in line for the proceeds of its assets.
Inflation risk (purchasing-power risk): The risk that inflation reduces purchasing power — a particular concern for investors receiving a fixed rate of interest.
Interest rate risk: The risk that interest rate changes affect a bond's value. Rising rates make new bonds more attractive, forcing older bonds to sell at a discount.
Liquidity risk: The risk that investors won't find a market for their securities, potentially preventing them from buying or selling when they want.
Credit (default) risk: The risk of an issuer defaulting on interest or principal payments. Lower-rated and high-yield (junk) bonds carry greater credit risk than higher-rated bonds.
Diversification (risk mitigation): Investing across multiple industries to dilute the risk caused by trends or events in any particular industry, reducing unsystematic risk.
Money market fund: A type of mutual fund that invests in liquid, short-term debt securities, cash, and cash equivalents.
What are the three categories of money market fund?: Government money market funds, tax-exempt (municipal) money market funds, and prime money market funds.
What must a government money market fund invest in, and how much?: 99.5% or more of total assets in cash, government securities, and/or fully collateralized repurchase agreements.
What must a tax-exempt (municipal) money market fund invest in?: 80% or more of its assets in municipal securities.
What does it mean for a money market fund to 'break the buck'?: When a stable-NAV fund's NAV per share deviates by more than half a cent (more than 1/2 of 1%) from $1.00, requiring repricing.
Are money market funds FDIC insured?: No. Money in a money market fund is not guaranteed by the FDIC like bank deposit accounts are.
Certificate of deposit (CD): A savings product that holds a fixed amount of money for a fixed period; in exchange the issuing bank or credit union pays interest.
How much of a CD is federally insured?: A CD bought through a federally insured bank or credit union is insured up to $250,000.
Commercial paper: A short-term corporate debt security that prime money market funds invest in.
Bond: A debt security. When you buy a bond, you lend to the issuer (government, municipality, or corporation), which promises to pay interest over the bond's life and repay principal at maturity.
Coupon rate: The interest rate a bond pays; the periodic interest payments themselves are called coupon payments.
Zero coupon bond: A bond that does not pay periodic interest; it is sold at a discount and pays its face value at maturity.
Treasury securities: Direct U.S. government debt: T-bills, T-notes, and T-bonds, backed by the full faith and credit of the U.S. government. Interest is exempt from state and local tax but not federal tax.
What is the maturity of a Treasury bill?: One year or less. T-bills are sold at a discount to face value.
What is the maturity range of a Treasury note?: Greater than one year but not exceeding ten years. Notes pay interest semiannually.
What is the maturity of a Treasury bond?: Greater than ten years (commonly 20 or 30 years). Bonds pay interest semiannually.
TIPS (Treasury Inflation-Protected Securities): Treasury securities whose principal is tied to the Consumer Price Index; maturity 5 years or greater, paying interest every six months on the inflation-adjusted principal.
Municipal bond: Debt of a state or local government. Interest is generally exempt from federal income tax (and state tax for in-state residents). Types: general obligation and revenue.
General obligation (GO) bond: A municipal bond backed by the full faith and credit of the issuer, which has the power to tax residents to pay bondholders.
Revenue bond: A municipal bond not backed by taxing power but by revenues from a specific project or source, such as highway tolls or lease fees.
How is municipal bond interest taxed?: Generally exempt from federal income tax; for state and local exemption, the buyer generally must reside in the state where the bond was issued.
Common stock: A security representing an ownership interest (equity) in a company. It entitles owners to vote at shareholder meetings and to receive dividends.
Preferred stock: Stock whose holders usually lack voting rights but receive dividends before common stockholders and have priority over common stockholders in a liquidation.
Dividend: A portion of a company's profit paid to shareholders. Dividend-paying public companies usually pay on a fixed schedule but may issue dividends at any time.
Ex-dividend date: The date that governs entitlement to a declared dividend; a buyer must own the stock before the ex-dividend date to receive the dividend.
What are the three basic types of investment company?: Open-end funds (mutual funds), closed-end funds, and unit investment trusts (UITs).
Mutual fund (open-end): An SEC-registered open-end investment company that continuously offers new redeemable shares priced at NAV and pools investor money into a managed portfolio.
Net asset value (NAV): An investment company's total assets minus total liabilities. A mutual fund's per-share NAV is computed at least once every business day.
Exchange-traded fund (ETF): An exchange-traded investment product that must register as an open-end investment company or UIT; its shares trade intraday on an exchange at market prices.
Closed-end fund: An investment company that issues a fixed number of shares in an IPO, then trades on an exchange at a market price that can be above or below NAV.
Are closed-end fund shares redeemable?: No. Unlike open-end funds, closed-end funds are not required to buy back shares; investors sell them on the exchange at market price.
Unit investment trust (UIT): An investment company that holds a generally fixed portfolio in a one-time public offering, does not actively trade, issues redeemable units, and terminates on a specified date.
Does a UIT have an investment adviser or board of directors?: No. A UIT has no board of directors, corporate officers, or investment adviser rendering advice during the life of the trust.
Option: A contract giving the owner the right to buy or sell an underlying asset at a fixed price on or before a specified future date. Options are derivatives.
Call option vs. put option: A call gives the right to buy the underlying at the strike price through expiration; a put gives the right to sell the underlying at the strike price through expiration.
Strike price: The price at which the option buyer may buy the underlying stock (if a call) or sell it (if a put).
Option premium: The price per share the buyer pays to purchase the option contract.
How many shares does one standard option contract represent?: An option contract generally represents 100 shares of the underlying stock.
Futures contract: An agreement to buy or sell a specific quantity of a commodity or financial instrument at a specified price on a particular future date.
Which agency regulates futures?: The CFTC (Commodity Futures Trading Commission).
Derivative: A financial instrument whose performance is derived, at least in part, from the performance of an underlying asset, security, or index.
Annuity: A contract between an investor and an insurance company, often used to provide a stream of periodic payments.
Variable annuity: An insurance contract that serves as a tax-deferred investment account with subaccounts (typically mutual funds). The holder bears market risk, so it is a security registered with the SEC.
Indexed (fixed-indexed) annuity: An annuity that credits interest linked in part to a market index, with caps limiting positive gains in exchange for downside protection.
Registered index-linked annuity (RILA): An annuity whose value rises or falls based partly on a benchmark like the S&P 500; unlike a fixed-index annuity, you can lose money in a RILA.
Which deferred annuities are SEC-registered securities?: Variable annuities and RILAs are securities that must register with the SEC; fixed and fixed-indexed annuities generally are not.
Hedge fund: A private, unregistered investment fund that pools investor money and pursues more flexible strategies than registered funds, with the goal of positive returns.
What is a typical hedge fund fee structure?: An asset management fee of 1-2% of NAV plus a performance fee of 15-20% of the fund's profit.
Private equity fund: A pooled investment vehicle whose adviser pools investor money to make investments, typically with a time horizon of 10 or more years.
REIT (Real Estate Investment Trust): A company that owns and typically operates income-producing real estate or related assets such as offices, malls, apartments, hotels, warehouses, and mortgages.
What is a REIT's minimum distribution requirement?: A REIT must distribute at least 90 percent of its taxable income to shareholders annually as dividends. Most pay out at least 100% and owe no corporate tax.
How are REIT dividends generally taxed?: As ordinary income; they are not entitled to the reduced tax rates that apply to other types of corporate dividends.
Bond fund / income fund: A type of investment company (mutual fund, ETF, closed-end fund, or UIT) that invests primarily in bonds or other debt securities.
Target date fund: A fund holding a mix of stock, bond, and other funds, designed for investors with a particular retirement or goal date in mind.
529 plan: A qualified tuition plan sponsored by states, agencies, or educational institutions under IRC Section 529. The two types are prepaid tuition plans and education savings plans.
Business development company (BDC): A type of closed-end investment company that invests in small and developing or financially troubled companies, defined under the Investment Company Act.
Revocable living trust: A trust that can be changed or ended at any time during the grantor's life; because it is revocable, it is treated as a grantor-type trust for tax purposes.
Irrevocable trust: A trust that by its terms cannot be modified, amended, or revoked; it may still be a grantor trust if grantor-trust powers are retained.
What tax form does an estate or non-grantor trust file?: Form 1041, the U.S. Income Tax Return for Estates and Trusts. A trust must file for any year it has $600 of income or a nonresident alien beneficiary.
Who reports the income of a grantor trust?: The grantor, on Form 1040. A grantor trust generally does not file Form 1041.
What standard must an IA meet before recommending a security?: Reasonable grounds to believe the recommendation is suitable, based on the client's investment objectives, financial situation, and needs after reasonable inquiry.
Suitability inquiry: The reasonable inquiry an adviser makes into a client's investment objectives, financial situation, and needs before recommending the purchase, sale, or exchange of any security.
Diversification (client strategy): Spreading money among different investments to reduce risk — 'don't put all your eggs in one basket' — at two levels: between asset categories and within each category.
What are the three main asset categories for allocation?: Stocks, bonds, and cash. A portfolio should be diversified both between these categories and within each one.
Rebalancing: Adjusting a portfolio back to its original target asset-allocation mix, typically by selling assets that have grown and buying those that have shrunk.
Beta: A measure of a security's or portfolio's volatility (systematic risk) relative to the market. A beta above 1.0 is more volatile than the market; below 1.0 is less volatile.
Non-diversified fund: A fund that may invest a greater portion of assets in individual issuers, so a single investment's value change can cause greater share-price fluctuation than in a diversified fund.
Dollar-cost averaging: Investing a fixed dollar amount at regular intervals regardless of price, buying more shares when prices are low and fewer when high — lowering average cost per share.
What is the holding period for a long-term capital gain?: More than one year. Assets held one year or less produce short-term gains, taxed as ordinary income.
How are net short-term capital gains taxed?: As ordinary income at graduated rates.
What are the long-term capital gains tax rate brackets?: 0%, 15%, or 20%, depending on the taxpayer's taxable income and filing status.
How much net capital loss can offset ordinary income per year?: The lesser of $3,000 ($1,500 if married filing separately) per year; any excess carries forward to future years.
Cost basis: The purchase price of a security plus costs of purchase such as commissions and transfer/recording fees.
Wash sale rule: A loss is disallowed if substantially identical securities are acquired within 30 days before or after a sale at a loss; the disallowed loss is added to the basis of the replacement security.
What is the 2026 IRA contribution limit?: $7,500, or $8,600 for those age 50 or older (a $1,100 catch-up).
What is the 2026 IRA catch-up amount for those 50+?: $1,100, bringing the total 2026 IRA limit for those age 50 or older to $8,600.
What is the 2026 401(k) elective deferral limit?: $24,500. The standard catch-up for those age 50 or older is $8,000, for a total of $32,500.
What is the SECURE 2.0 higher catch-up for ages 60-63 in 2026?: $11,250 (for 401(k)/403(b)/governmental 457/TSP plans), replacing the standard $8,000 catch-up for those who turn 60-63 that year.
Traditional IRA: A tax-advantaged personal savings plan where contributions may be tax deductible; earnings grow tax-deferred and distributions are taxed as ordinary income.
Roth IRA: An individual retirement account funded with after-tax dollars. Contributions are never deductible, but qualified distributions — held 5 years and taken after age 59 1/2 — are entirely tax-free.
Required minimum distribution (RMD): The minimum amount a traditional IRA or retirement-plan owner must begin withdrawing annually starting at age 73. Roth IRAs have no RMD during the owner's lifetime.
At what age do RMDs begin?: Age 73. The first RMD may be delayed until April 1 of the following year; later RMDs are due by December 31 each year.
401(k) plan: An employer-sponsored retirement savings plan offering investment options, typically mutual funds. In traditional 401(k)s, employees invest pre-tax salary; contributions and earnings are untaxed until withdrawal.
ERISA: The Employee Retirement Income Security Act, governing private retirement plans. A fiduciary must act solely for participants, diversify investments, and follow the plan; breaches carry personal liability.
What is the ERISA exclusive benefit rule?: Fiduciaries must run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.
What is an ERISA fiduciary's diversification duty?: To diversify plan investments to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.
What is the ERISA prudent expert standard?: The duty to act prudently, requiring expertise in areas such as investments — a central fiduciary responsibility.
Best execution: A broker-dealer's duty to seek the most favorable terms reasonably available for customer orders, enforced through the antifraud provisions of the federal securities laws.
Market order: An order to buy or sell at the best available price; it generally executes immediately, but the price is not guaranteed.
Limit order: An order to buy or sell at a specific price or better.
Stop order: An order in which the stop price triggers conversion to a market order; the execution price can deviate significantly in fast markets.
Stop-limit order: An order that combines stop and limit features: once the stop price triggers, it becomes a limit order rather than a market order.
What is the current standard securities settlement cycle?: T+1 (one business day after the trade date), effective May 28, 2024, for most securities transactions.
What is the Regulation T initial margin requirement?: 50%. An investor may borrow up to 50% of the purchase price of margin securities; firms may require more.
Regulation T: The Federal Reserve rule setting the initial margin requirement for buying margin securities at 50% — the customer deposits 50% and the broker-dealer may lend the rest.
Capital gain vs. capital loss: A gain results if a security is sold above its adjusted basis; a loss results if sold below it.
Modern portfolio theory (MPT): The framework that an investor can build an 'efficient' portfolio offering the most return for a level of risk by combining assets whose returns are not perfectly correlated.
Strategic asset allocation: Setting and maintaining target percentages for asset classes based on a client's long-term objectives and risk tolerance, rebalancing back to those targets over time.
Active vs. passive management: Active management seeks to outperform a benchmark through security selection and timing; passive management seeks to match an index at low cost.
Growth, value, and income styles: Investment approaches emphasizing, respectively, companies expected to grow earnings faster than average, securities trading below intrinsic value, and securities producing steady income.
What are the named client types under the NASAA outline?: Individuals (natural persons), sole proprietorships, business entities, trusts, and estates.
Net capital loss carryforward: Capital losses exceeding the annual $3,000 ($1,500 MFS) ordinary-income deduction limit, carried forward to offset gains and income in future years.
Investment adviser (IA): Any person who, for compensation, is in the business of advising others about the value of securities or the advisability of buying or selling them. The Uniform Securities Act's definition includes financial planners.
What is the three-prong test for an investment adviser?: Compensation, plus engaging in the business, plus giving advice about securities. All three must be present.
What is the LATE exclusion from the IA definition?: A Lawyer, Accountant, Teacher, or Engineer whose investment advice is solely incidental to their profession (and who does not hold out as an adviser) is excluded.
Which persons are excluded from the IA definition?: Banks and trust companies; LATE professionals (advice solely incidental); broker-dealers with no special compensation; bona fide publishers; federal covered advisers; and IARs.
Federal covered adviser: An adviser registered with (or eligible to register with) the SEC — generally one with $110M+ in AUM. States cannot require it to register but can still pursue fraud.
Investment adviser representative (IAR): An individual who works for an investment adviser and gives advice, manages accounts, solicits clients, or supervises those who do. IARs register where they have a place of business or enough clients.
Who is excluded from the IAR definition?: Clerical or ministerial personnel, and persons excluded by Administrator rule.
Broker-dealer (BD): A firm in the business of effecting securities transactions for customers (broker) or for its own account (dealer). It registers with the SEC and the states.
Agent: An individual who represents a broker-dealer (or issuer) in effecting securities transactions. Under the USA, clerical and ministerial staff are not 'agents.'
At what AUM may an adviser register with the SEC?: $100 million. An adviser may register with the SEC once it reaches $100M in AUM.
At what AUM must an adviser register with the SEC?: $110 million. Registration becomes mandatory once AUM reaches $110M (absent an exemption).
When must an SEC-registered adviser withdraw and return to state registration?: When AUM drops below $90 million. Until then it is not required to file Form ADV-W.
How is a small adviser (under $25M AUM) regulated?: By the state. SEC registration is prohibited for small advisers under $25 million in AUM (absent an exception).
How is a mid-sized adviser ($25M-$100M) regulated?: By the state, unless not subject to home-state examination or the home state does not require registration (e.g., NY and Wyoming advisers register with the SEC).
What is the state de minimis exemption for advisers?: An IA with no place of business in a state and no more than 5 clients resident there in any 12 consecutive months is exempt from that state's registration.
Which advisers must always register with the SEC regardless of AUM?: Advisers to registered investment companies, pension consultants, multi-state advisers (15+ states), internet advisers, and certain others.
Do state-registered advisers escape federal antifraud rules?: No. Federal anti-fraud provisions continue to apply even when an adviser is state-registered.
Fiduciary duty: An investment adviser's duty of care and duty of loyalty — to act in the client's best interest at all times, seek best execution, and either avoid conflicts of interest or fully disclose them for informed consent.
What two duties make up an adviser's fiduciary duty?: The duty of care and the duty of loyalty, under the Investment Advisers Act of 1940.
What does the duty of care require of an adviser?: Advice in the client's best interest based on the client's objectives, seeking best execution where the adviser selects the broker-dealer, and ongoing advice and monitoring.
What does the duty of loyalty require of an adviser?: Full and fair disclosure of all material facts including conflicts of interest, and either eliminating a conflict or disclosing it so the client can give informed consent.
Can a client waive an adviser's federal fiduciary duty?: No. The federal fiduciary duty cannot be waived, though it follows the scope of the agreed advisory relationship.
Can disclosure alone satisfy the duty of care?: No. Disclosure with informed consent can satisfy the duty of loyalty, but cannot by itself satisfy the duty of care.
Custody: Holding, or having any authority to obtain possession of, client funds or securities. Custody triggers extra safeguards — qualified custodian, account statements, and often a surprise annual examination.
What safeguards apply when an IA has custody of client assets?: Notify the Administrator, use a qualified custodian, notify the client of custodian details, send quarterly account statements, and undergo an annual surprise CPA examination.
How often must account statements be sent to custody clients?: At least quarterly (every 3 months), showing the funds and securities in custody.
What is the minimum net worth for an IA with custody?: $35,000 under the NASAA Minimum Financial Requirements model rule.
What is the minimum net worth for an IA with discretion but no custody?: $10,000 under the NASAA Minimum Financial Requirements model rule.
How long must an IA retain its books and records?: 5 years from the end of the fiscal year in which last made, with the first 2 years kept in the principal office.
Uniform Securities Act (USA): The NASAA model state securities law on which most state 'blue sky' laws are based. It defines advisers, broker-dealers, agents, and securities, and sets registration and antifraud rules.
Investment Advisers Act of 1940: The federal law governing investment advisers, including SEC registration and the antifraud/fiduciary provisions of Section 206. State law (the USA) mirrors many of its definitions.
Section 206 (antifraud): The Advisers Act provision making it unlawful for any adviser — registered or not — to engage in fraudulent, deceptive, or manipulative conduct. It imposes an affirmative duty of full and fair disclosure.
USA Section 501 — general fraud: Makes it unlawful, in connection with the offer, sale, or purchase of a security, to defraud, make an untrue statement of material fact, omit a material fact, or engage in deceit.
Are there exemptions from the antifraud provisions?: No. The antifraud provisions apply to all securities and transactions — including exempt securities, exempt transactions, and federal covered advisers.
Accredited investor: An investor eligible to buy private (Reg D) offerings: net worth over $1M excluding the primary residence, or income over $200K individual / $300K joint in each of the last two years.
What is the accredited investor net-worth test?: Individual or joint net worth exceeding $1,000,000, excluding the value of the person's primary residence.
What is the accredited investor income test?: Income over $200,000 individually (or $300,000 joint) in each of the two most recent years, with a reasonable expectation of the same in the current year.
Form ADV: The investment adviser registration form. Part 1 is regulatory data; Part 2A is the plain-English client brochure (fees, conflicts, discipline) and Part 2B is the supplement about the advising individuals.
What is Form ADV Part 2A?: The 'brochure' — a narrative, plain-English disclosure of 18 items including advisory business, fees, conflicts of interest, disciplinary history, and custody.
What is Form ADV Part 2B?: The 'brochure supplement' — disclosing the individuals who provide advice and have direct client contact, including their background, discipline, and supervision.
Through which system do IAs file Form ADV?: The IARD (Investment Adviser Registration Depository). Broker-dealers and agents register through CRD.
Brochure rule: Advisers Act Rule 204-3: deliver the Form ADV Part 2 brochure at least 48 hours before the contract, or at signing if the client may cancel without penalty within five business days; deliver annually thereafter.
What are the brochure delivery timing options?: At least 48 hours before entering the contract, OR at the time of signing if the client may terminate without penalty within five business days.
When is the annual brochure delivery due?: Within 120 days of the end of the adviser's fiscal year — either the updated brochure or a summary of material changes with an offer to provide the full brochure, free of charge.
Churning: Inducing transactions in a client's account that are excessive in size or frequency given the client's resources and objectives — a prohibited practice.
Unauthorized trading: Effecting transactions for a client without authority — a prohibited and unethical business practice.
What written authority is needed to exercise discretion?: Prior written discretionary authority. Oral authority is permitted only for the first 10 business days after the initial discretionary transaction, pending written authorization.
May an IA borrow money or securities from a client?: No, unless the client is a broker-dealer, an affiliate, or a financial institution in the business of lending.
May an IA guarantee a client against loss?: No. Guaranteeing a client against loss is a prohibited and unethical business practice.
May an IA charge an unreasonable advisory fee?: No. Charging an unreasonable advisory fee is an enumerated unethical business practice.
When must an IA disclose a material conflict of interest?: In writing, before advice is rendered, when the conflict could reasonably be expected to impair unbiased and objective advice.
May an IA disclose a client's identity or investments?: No, not without the client's consent, unless disclosure is required by law.
When does a securities registration become effective under the USA?: At noon on the 30th day after filing, absent a stop order (the Administrator may defer for amendments).
When do registrations expire under the USA?: December 31 of each year; they must be renewed annually with the required fee.
What happens to an IAR's registration if the employing IA's registration ends?: The IAR's registration is no longer effective. An IAR's registration depends on the employing adviser's registration.
Section 28(e) soft dollars: A safe harbor allowing a manager with investment discretion to pay higher commissions in exchange for research and brokerage services, if reasonable in relation to their value.
What services qualify under the Section 28(e) soft-dollar safe harbor?: Research and brokerage services only. Other goods or services (e.g., office overhead) fall outside the safe harbor.
What is the MSRB Rule G-20 gift limit?: $100 per year per recipient on gifts and gratuities related to municipal securities business, with a 'normal business dealings' exception.
Municipal advisor: A person who advises municipal entities on municipal financial products or securities; owes a fiduciary duty to municipal entity clients and must register with the SEC.
Person (statutory definition): A natural person or a company (such as a corporation, partnership, association, trust, or organized group of persons).
Security (statutory definition): A broad category including notes, stocks, bonds, debentures, investment contracts, options, and in general any instrument commonly known as a 'security.'
What is IAR continuing education under the NASAA model rule?: 12 hours annually — 6 hours of Products and Practice plus 6 hours of Ethics and Professional Responsibility.
Asset allocation: Dividing a portfolio among asset categories such as stocks, bonds, and cash based on the client's goals, time horizon, and risk tolerance.
Tactical asset allocation: A more active strategy that temporarily shifts a portfolio's asset-class weights away from long-term targets to take advantage of market conditions.
Sector rotation: A strategy of shifting portfolio holdings among industry sectors expected to outperform at different points in the economic cycle.
What two levels of diversification should a portfolio have?: Between asset categories (stocks, bonds, cash) and within each asset category.
At what level of taxable income does the 0% long-term capital gains rate apply?: It applies to taxpayers with the lowest taxable income; higher income moves gains into the 15% and then 20% brackets, by filing status.
Where do excess capital losses go after the annual deduction limit?: They carry forward to future tax years to offset future capital gains and (subject to the annual limit) ordinary income.
Are Roth IRA contributions tax deductible?: No. Roth IRA contributions are made with after-tax dollars and are never deductible, but qualified distributions are tax-free.
What two conditions make a Roth IRA distribution qualified (tax-free)?: The account must be held at least 5 years AND the distribution taken on or after age 59 1/2 (or for death, disability, or a first home).
Do Roth IRAs require minimum distributions during the owner's life?: No. Roth IRAs have no required minimum distributions during the owner's lifetime.
What is the 2026 SIMPLE IRA contribution limit?: $17,000 (enhanced limit $18,100), with a standard age-50+ catch-up of $4,000.
What is a suitable basis for recommending to a client?: The client's investment objectives, financial situation, and needs — gathered through reasonable inquiry before any recommendation.
Client profile: The collected facts about a client — objectives, financial situation, risk tolerance, time horizon, and needs — used to make suitable recommendations.
Time horizon: The length of time a client expects to hold an investment before needing the funds; it shapes appropriate asset allocation and risk level.
Risk tolerance: A client's willingness and ability to endure declines in portfolio value; a key input to suitable asset allocation.
What is the standard settlement timing for stocks and bonds today?: One business day after the trade date (T+1), effective May 28, 2024.
How much can an investor borrow under Reg T to buy margin securities?: Up to 50% of the purchase price; the customer must deposit the other 50%. Firms may require more.
Estate (for tax purposes): A decedent's property; the fiduciary files Form 1041 to report the estate's income, deductions, gains, losses, and any income tax liability.
When may employees divest employer securities in an ERISA plan?: Generally after 3 years of service, for employer contributions invested in employer securities.
Capital market theory: The body of theory (including diversification, asset allocation, and beta) describing how investors should be rewarded for bearing systematic risk.
What does a beta above 1.0 indicate?: The security or portfolio is more volatile (more sensitive to market moves) than the overall market.
What does a beta below 1.0 indicate?: The security or portfolio is less volatile (less sensitive to market moves) than the overall market.
What is the holding period that makes a gain short-term?: One year or less. Short-term gains are taxed as ordinary income at graduated rates.
What is added to the basis of a replacement security in a wash sale?: The disallowed loss. It increases the basis of the substantially identical securities acquired within the 30-day window.
Passive (index) investing: A strategy seeking to match a market index's return at low cost rather than outperform it through active selection.

To find us again, just search “Career Employer Series 65”

By Career EmployerUpdated Jun 17, 2026

200+ free Series 65 flashcards — 4 ways to study

Series 65 Flashcard of the Day

The classic card. Do you know this one?

Click Study Flashcards above to open the flashcard hub — hundreds of Series 65 cards you can flip, match, type, or quiz yourself on. Every card is drawn from the four NASAA content areas, so you study exactly what the exam tests.^[1] Pair them with our free practice exam, study guide.

Series 65 Flashcard Study Modes

Most flashcard sites give you one thing: a card to flip. Ours has four modes so you can both learn the material and prove you know it — the difference between recognizing an answer and recalling it under pressure.

Flip (Study) — the classic card. Flip term ↔ definition, shuffle the deck, and mark each card “Got it” or “Still learning.”
Match (Game) — a timed game: pair each term to its definition as fast as you can. Great for cementing vocabulary.
Type (Recall) — read the definition and type the term. Typing forces true active recall instead of passive recognition.
Quiz (Test) — multiple-choice questions generated from the cards, so you can self-test exactly like exam day.

Free Series 65 flashcards from Career Employer — active recall for the NASAA Uniform Investment Adviser Law exam

Why Flashcards Work for the Series 65

Flashcards aren’t busywork — they’re built on active recall: pulling an answer out of memory strengthens it far more than re-reading notes. Pair that with spacing — short sessions across several days rather than one cram — and you retain more in less time. Used alongside our practice exam and study guide, flashcards turn review time into measurable progress.

Series 65 Flashcards by Topic

The cards are organized by the four NASAA content areas. Weight your study toward the heaviest ones — client strategies and the law are 30% each:^[1]

Series 65 flashcards by NASAA content area
NASAA content area	% of exam
Client recommendations & strategies	30%
Laws, regulations & ethics	30%
Investment vehicle characteristics	25%
Economic factors & business information	15%

How to Get the Most Out of These Flashcards

Start early, review daily. Begin flashcards as you cover each area, not the week before — a few minutes a day beats one marathon session.
Use Type and Quiz, not just Flip. Recognizing the right answer is easy; recalling and choosing it is the real test.
Drill your weakest area. Pick a single content-area deck and grind it until the Match time drops and the Quiz score climbs.
Mirror the exam weighting. Spend the most time on client strategies and the law — together they’re 60% of the test.
Then prove it. When the cards feel easy, confirm with a full practice exam — aim for 80%+ before exam day.

Series 65 Flashcards FAQ

Hundreds of free Series 65 flashcards, organized across the four NASAA content areas tested on the exam. They're free to use with no account required.

References

1.NASAA. “Series 65 Exam Content Outline.” NASAA.org. ↑
2.FINRA. “Series 65 — Uniform Investment Adviser Law Exam.” FINRA.org. ↑
3.U.S. Securities and Exchange Commission. “Commission Interpretation Regarding Standard of Conduct for Investment Advisers (Release IA-5248).” SEC.gov. ↑
4.U.S. Securities and Exchange Commission. “Investment Advisers Act of 1940 (compiled).” GovInfo.gov. ↑

Career Employer

Career Employer is the ultimate resource to help you get started working the job of your dreams. We cover topics from general career information, career searching, exam preparation with free study materials, career interviewing, and becoming successful in your career of choice.

All Posts

Career Employer’s Editorial Process

Here at Career Employer, we focus a lot on providing factually accurate information that is always up to date. We strive to provide correct information using strict editorial processes, article editing, and fact-checking for all of the information found on our website. We only utilize trustworthy and relevant resources. To find out more, make sure to read our full editorial process page here.