Series 65 Exam Contents

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Accelerate your exam preparation with our study guide. Each exam subject below shows a brief lesson with condensed study notes, examples, term definitions, and practice problems.

I. Economic Factors and Business Information

A. Basic Economic Concepts

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1. Business Cycles
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2. Monetary and Fiscal Policies
3. Global Factors
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3.1 Currency Valuation and Effective Exchange Rates
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3.2 Sovereign Debt
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3.3 Geopolitical
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4. Inflation, Deflation
5. Interest Rates, Yield Curves, Credit Spreads
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5.1 Interest Rates
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5.2 Yield Curves
6. Economic Indicators
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6.1 Gross Domestic Product (GDP)
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6.2 Employment Indicators
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6.3 Trade Deficit
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6.4 Consumer Price Index (CPI)

B. Financial Reporting

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1. Financial Reports
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1.1 Income Statement
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1.2 Balance Sheet
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1.3 Statement of Cash Flow
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1.4 Corporate SEC Filings
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1.5 Annual Reports
2. Accounting Fundamentals
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2.1 Audited v. Unaudited
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2.2 Cash v. Accrual Accounting

C. Analytical Methods

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1. Time Value of Money Concepts
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1.1 Internal Rate of Return (IRR)
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1.2 Net Present Value (NPV)
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1.3 Future Value (FV)
2. Descriptive Statistics
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2.1 Mean
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2.2 Median
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2.3 Mode
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2.4 Range
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2.5 Standard Deviation
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2.6 Alpha
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2.7 Beta
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2.8 Correlation
3. Financial Ratio Interpretation and Calculation
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3.1 Current Ratio
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3.2 Quick Ratio
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3.3 Debt-to-Equity Ratio
4. Valuation Factors, Interpretation and Calculation
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4.1 Price-to-Earnings
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4.2 Price-to-Book

D. Types of Risk

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1. Systematic Risks
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1.1 Interest Rate Risk
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1.2 Sector Risk
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1.3 Geopolitical Risk
2. Unsystematic Risks
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2.1 Credit Risk
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2.2 Legal, Regulatory Risk
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2.3 Financial Risk
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2.4 Issuer Specific Risk
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3. Opportunity Cost
4. Capital Structure Including Liquidation Priority
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4.1 Debt
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4.2 Preferred Stock
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4.3 Common Stock

II. Investment Vehicle Characteristics

A. Types and Characteristics of Cash and Cash Equivalents

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1. Insured Deposits
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1.1 Demand Deposits
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1.2 Certificates of Deposit
2. Money Market Instruments
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2.1 Commercial Paper
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2.2 Treasury Bills

B. Types of Fixed Income Securities

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1. U.S. Government Securities
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1.1 Treasury Securities
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1.2 Treasury Inflation-Protected Securities (TIPS)
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2. Asset-Backed Securities
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3. Corporate Bonds
4. Municipal Bonds
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4.1 General Obligation
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4.2 Revenue
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4.3 Insured
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4.4 Tax Implications
5. Foreign-Issued Bonds
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5.1 Government, Sovereign Debt
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5.2 Corporate Debt
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6. Convertible Bonds

C. Fixed Income Valuation and Risk

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1. Fixed Income Characteristics
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1.1 Coupon v. Zero Coupon
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1.2 Maturity
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1.3 Pricing - Par, Premium, or Discount
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1.4 Discounted Cash Flow
2. Yield
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2.1 Nominal Yield
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2.2 Current Yield
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2.3 Yield to Maturity
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2.4 Real Yield
3. Callable Bonds
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3.1 Call Features
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3.2 Yield to Call
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3.3 Yield to Worst
4. Fixed-Income Risk
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4.1 Risk
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4.2 Market Liquidity
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4.3 Bond Ratings
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4.4 Duration
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4.5 Credit Spread
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4.6 Liquidation Preference
5. Taxation of Fixed-Income Investments
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5.1 Tax Implications
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5.2 After-Tax Yield
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5.3 Tax-Equivalent Yield
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6. Convertible Bond Conversion Valuation

D. Types of Equity Securities

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1. Common Stock
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1.1 Domestic
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1.2 Foreign
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1.3 American Depositary Receipt (ADR)
2. Other Stock
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2.1 Preferred
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2.2 Convertible Preferred Stock
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2.3 Floating Rate Preferred

E. Characteristics of Equity Securities

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1. Shareholder Rights
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1.1 Voting Rights
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1.2 Antidilution, Preemptive Right
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1.3 Liquidation Preferences
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2. Restricted Stock and Resale Restrictions
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3. Dividends
4. Employee Stock Options
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4.1 Incentive
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4.2 Nonqualified

F. Methods Used to Determine the Value of Equity Securities

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1. Technical Analysis
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2. Fundamental Analysis
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3. Dividend Discount
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4. Discounted Cash Flow

G. Equity Public Offering

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1. Initial Public Offering (IPO)
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2. Secondary Offering
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3. Special Purpose Acquisition Companies (SPAC)
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4. Direct Listings

H. Types of Pooled Investments

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1. Mutual Funds
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1.1 Open-End
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1.2 Closed-End
2. Private Funds
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2.1 Hedge Funds
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2.2 Private Equity
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2.3 Venture Capital
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3. Unit Investment Trusts (UITs)
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4. Exchange Traded Funds (ETFs)
5. Real Estate Investment Trusts (REITs)
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5.1 Liquid
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5.2 Non-Liquid

I. Characteristics of Pooled Investments

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1. Share Class
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2. Liquidity
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3. Tax Implications
4. Pricing
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4.1 Net Asset Value
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4.2 Discount, Premium
5. Relative Comparisons
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5.1 Benchmarks
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5.2 Manager Tenure
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5.3 Change in Investment Policy
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5.4 Style

J. Types of Derivative Securities

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1. Options and Warrants
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2. Futures (Definitions)

K. Characteristics of Derivative Securities

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1. Costs
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2. Benefits
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3. Risks

L. Alternative Investments

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1. Limited Partnerships
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2. Exchange Traded Notes
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3. Leveraged Funds
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4. Inverse Funds
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5. Structured Products

M. Insured-Based Products

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1. Annuities
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1.1 Variable Annuities
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1.2 Fixed Annuities
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1.3 Indexed Annuities
2. Life Insurance
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2.1 Whole
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2.2 Term
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2.3 Universal
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2.4 Variable

N. Other Assets

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1. Commodities and Precious Metals
2. Digital Assets
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2.1 Definition
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2.2 Risks

III. Client Investment Recommendations and Strategies

A. Type of Client

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1. Person
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1.1 Individual
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1.2 Sole Proprietorship
2. Business Entities
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2.1 General Partnership
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2.2 Limited Partnership
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2.3 Limited Liability Company (LLC)
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2.4 C and S-Corporations
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3. Trusts and Estates
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4. Foundations and Charities

B. Client Profile

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1. Financial Goals and Objectives
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1.1 Retail Investors
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1.2 High Net Worth Individuals and Families
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1.3 Institutional Clients
2. Current and Future Financial Situation
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2.1 Cash Flow
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2.2 Balance Sheet
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2.3 Existing Investments
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2.4 Tax Situation
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2.5 Social Security and Pensions
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3. Risk Tolerance
4. Nonfinancial Investment Considerations
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4.1 Values-Based Investing
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4.2 Environmental, Social, Governance (ESG)
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4.3 Religious Criteria
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4.4 Experience
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4.5 Life Events
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4.6 Life Stage
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4.7 Behavioral Finance
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5. Client Identification

C. Capital Market Theory

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1. Capital Asset Pricing Model (CAPM)
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2. Modern Portfolio Theory
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3. Efficient Market Hypothesis

D. Portfolio Management Strategies, Styles and Techniques

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1. Strategies
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1.1 Strategic Asset Allocation
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1.2 Tactical Asset Allocation
2. Styles
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2.1 Active
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2.2 Passive
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2.3 Growth
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2.4 Value
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2.5 Income
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2.6 Capital Appreciation
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2.7 Momentum
3. Techniques
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3.1 Diversification
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3.2 Sector Rotation
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3.3 Purchasing or Selling Options
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3.4 Leveraging
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3.5 Volatility Management
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3.6 Inverse Strategies
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3.7 High Frequency Trading

E. Tax Considerations

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1. Income Tax Fundamentals: Individual
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1.1 Capital Gains
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1.2 Qualified Dividends
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1.3 Tax Basis
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1.4 Marginal Bracket
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1.5 Alternative Minimum Tax
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1.6 Pension and Retirement Plan Distributions
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1.7 Government Benefit Implications
2. Income Tax Fundamentals: Corporate
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2.1 Corporate
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2.2 Trusts
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2.3 Passthrough Entities
3. Wealth Transfer
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3.1 Estate Tax and Gift Tax Fundamentals
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3.2 Unified Credit
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3.3 Annual vs Lifetime
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3.4 Portability

F. Retirement Plans

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1. Individual Retirement Accounts
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2. Solo 401(k)
3. Qualified Retirement Plans
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3.1 Defined Benefit
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3.2 Defined Contribution
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4. Nonqualified Retirement Plans

G. ERISA Issues

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1. Qualified Default Investment Alternative (QDIA)
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2. Investment Policy Statement
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3. Prohibited Transactions

H. Special Types of Accounts

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1. Education-Related
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1.1 529s
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1.2 Coverdell IRA
2. Minors
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2.1 Uniform Transfers to Minors Act (UTMA)
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2.2 Uniform Gift to Minors Act (UGMA)
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3. Health-Savings Accounts (HSA)

I. Ownership and Estate Planning Techniques

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1. Types of Ownership
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1.1 Joint Tenants with Rights of Survivorship (JTWROS)
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1.2 Tenants in Common (TIC)
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1.3 Tenancy by the Entirety (TBE)
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1.4 Community Property with Rights of Survivorship (CPWROS)
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2. Transfer-on-Death (TOD), Pay-on-Death (POD)
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3. Beneficiary Designation Including per Stirpes
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4. Trusts and Wills
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5. Qualified Domestic Relations Order (QDROs)
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6. Donor Advised Funds

J. Trading Securities

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1. Terminology
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1.1 Bids
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1.2 Short Sale
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1.3 Cash Accounts
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1.4 Margin Accounts
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1.5 Principal or Agency Trades
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1.6 Payment for Order Flow
2. Roles
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2.1 Introducing Broker-Dealers
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2.2 Clearing Broker-Dealers
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2.3 Custodians
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2.4 Market Makers
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2.5 Exchanges
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3. Best Execution

K. Portfolio Performance Measures

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1. Returns
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1.1 Risk-Adjusted
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1.2 Time-Weighted
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1.3 Dollar-Weighted
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1.4 Annualized
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1.5 Total
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1.6 Holding Period
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1.7 Expected
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1.8 Inflation-Adjusted
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1.9 After Tax
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2. Relevant Benchmarks

IV. Laws, Regulations, and Guidelines Including Prohibition on Unethical Business Practices

A. Regulation of Investment Advisers, Including State Registered and Federal Covered Advisers

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1. Definitions of Investment Advisers
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1.1 Investment Adviser
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1.2 Exempt Reporting Adviser
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2. Notice Filing Requirements
3. Registration, Post-Registration
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3.1 Books and Records Requirements
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3.2 Registration Maintenance Requirements
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4. Investment Adviser Representative Supervision

B. Regulation of Investment Adviser Representatives

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1. Definition of an Investment Adviser Representative
2. Registration, Post-Registration
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2.1 Activities Requiring Registration
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2.2 Exclusions From Registration
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2.3 Disclosure of Reportable Events

C. Regulation of Broker-Dealers

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1. Definitions of Broker-Dealers

D. Regulation of Agents of Broker-Dealers

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1. Definition of an Agent of a Broker-Dealer

E. Regulation of Securities and Issuers

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1. Securities
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1.1 State Registration Requirements, Postregistration Requirements
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1.2 Exemptions and Exclusions From Registration
2. Issuers
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2.1 Definition
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2.2 Registration of Issuer Agents
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2.3 Finders

F. Remedies and Administrative Provisions

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1. Authority of State Securities Administrator
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2. Administrative Actions

G. Communication with Clients and Prospects

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1. Required Disclosures to Clients
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2. Unlawful Representations Concerning Registrations
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3. Performance Guarantees Prohibition
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4. Client Contracts
5. Correspondence and Advertising
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5.1 Social Media
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5.2 Email, Digital Messaging

H. Ethical Practices and Fiduciary Obligations

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1. Compensation
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1.1 Fees
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1.2 Commissions
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1.3 Performance Based Fees
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1.4 Soft Dollars
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1.5 Disclosure of Compensation
2. Client Funds and Securities
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2.1 Custody
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2.2 Discretion
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2.3 Advice to Client Standard of Care
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2.4 Anti-Money Laundering (AML)
3. Conflicts of Interest
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3.1 Loans to and From Customers
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3.2 Sharing in Profits and Losses in a Customer Account
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3.3 Client Confidentiality
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3.4 Insider Trading
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3.5 Selling Away
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3.6 Market Manipulation
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3.7 Personal Securities Transactions
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3.8 Political Contribution
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3.9 Exploitation of Vulnerable Adults
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4. Cyber Security
5. Business Continuity Plan
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5.1 Disaster Recovery
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5.2 Succession Planning

I. SECURE Act 2.0

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1. Main Objectives