Series 65 — Economics & Investment Vehicles flashcards
10 of 80 cards free to study here · 7 topics · the whole deck is built into Willys
Economic factors, financial statements and ratios, time value of money and risk statistics, the named investment risks, stocks, bonds, funds, REITs, DPPs, hedge funds, options and insurance products as the Series 65 tests them.
Learn deck · part of NASAA Series 65 and Series 66 · written against: NASAA Series 65 and 66 content outlines; Uniform Securities Act, NASAA model rules and the Investment Advisers Act of 1940 as of 2026. Updated 2026-10-10.
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Real GDP has grown for several quarters, unemployment is falling and factories are running near capacity. Which business-cycle phase is this, and what pressure tends to build as it matures?Expansion — and as spare capacity runs out near the peak, inflation pressure tends to build.Economic Factors
Why: tight labor and product markets let wages and prices rise, which is when a central bank usually starts to tighten. -
What is stagflation, and why is it so hard for a central bank to treat?Stagnant or falling growth with high unemployment and high inflation at the same time.Economic Factors
Why: easing to support jobs feeds inflation, while tightening to fight inflation deepens the slowdown. -
On which financial statement do retained earnings appear, and what reduces them?On the balance sheet, in shareholders' equity; net losses and dividends declared reduce them.Financial Reporting
Why: retained earnings are the cumulative profits the company has kept rather than paid out. -
A company has current assets of 800,000 dollars and current liabilities of 400,000. What are its working capital and current ratio?Working capital is 400,000 dollars and the current ratio is 2 to 1.Financial Reporting
Why: working capital = current assets − current liabilities; current ratio = current assets ÷ current liabilities. -
A client invests 10,000 dollars at 6% compounded annually for 3 years. What is the future value?About 11,910 dollars.Quantitative Methods
Why: ; each year's interest earns interest in later years. -
Using the Rule of 72, about how long does money take to double at an 8% annual return?About 9 years ().Quantitative Methods
Why: the rule is a quick approximation of compound growth that works best for rates between roughly 6% and 10%. -
A company with heavy debt sees interest payments squeeze its profits during a slowdown. Which risk is this, as distinct from business risk?Financial risk — the risk that comes from using borrowed money.Investment Risks
Why: business risk comes from the company's operations and industry, while financial risk is added by leverage on top of it. -
A zero-coupon bond matures in 12 years. What is its Macaulay duration?12 years — equal to its maturity.Equity & Fixed Income
Why: a zero pays all of its cash at one date, so the weighted-average time to its cash flows is that date; any coupon bond's duration is shorter than its maturity. -
Why can a closed-end fund trade at a discount to its net asset value when an open-end mutual fund cannot?Closed-end shares typically trade on an exchange at market prices, while open-end mutual fund shares are always redeemed by the fund at NAV.Pooled & Alternative Investments
Why: a closed-end fund has a fixed number of shares and does not stand ready to redeem them. -
A client has a large gain in a stock she wants to keep but fears a short-term drop. Which option position protects her downside while keeping her upside?Buying puts on the stock (a protective put).Derivatives & Insurance Products
Why: the puts gain value as the stock falls below the strike, setting a floor on her loss for the cost of the premium.
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About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- Topic outline follows the NASAA Series 65 content outline effective June 12, 2023 (outline only; no outline text reproduced).
- Checked against SEC Investor.gov investor bulletins, TreasuryDirect product descriptions, FINRA Rule 2341 and Regulatory Notice 09-31, and IRS Publications 550 and 575; public domain U.S. government sources where federal.
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