STC Series 65 Course Exam 2025 With
100% correct Answers
What information is required when renewing an advisory contract? - CORRECT ANSWER✔✔-
formula used to calculate the firm's advisory fee
-the amount of the fees
-the length of the contract
When is an exempt reporting investment advisor exempt from registration with the SEC? -
CORRECT ANSWER✔✔-if they manage private funds that have less than $150 million in AUM -
private funds can include hedge funds
Beta vs standard deviation vs alpha - CORRECT ANSWER✔✔beta: measure of non-diversifiable
risk
alpha: measure of diversifiable risk
standard deviation: measure of risk according to MPT
Which metric would allow a financial professional to calculate the fair market price of a bond? -
CORRECT ANSWER✔✔discounted cash flow
-they use this to compare the discounted cash flow value to the current price of the bond to
determine if the bond is overvalued, undervalued, or properly priced
,A 6% coupon bond is selling at a basis of 6.20. If interest rates in the market decline below 6%,
the bond's basis will - CORRECT ANSWER✔✔-decline
a bond's basis is synonymous with its yield-to-maturity. interest rates and YTM on a bond will
move in the same direction.
if market interest rates decline it means that yields will also decline
according to the USA, the application process for an IA includes - CORRECT ANSWER✔✔filing a
completed form adv and form u4for each IAR who will be providing advisory services
the phase of the business cycle that represents the bottom of the economy's decline is -
CORRECT ANSWER✔✔trough
-in this phase, the lower prices of goods should cause the economy to move into a period of
expansion
what type of order may a customer use to protect profits or limit losses in current positons? -
CORRECT ANSWER✔✔stop order
When are market and limit orders used? - CORRECT ANSWER✔✔they are typically used to enter
the market
If the market rises, what order can be used to protect short stock positions? - CORRECT
ANSWER✔✔buy stop orders
if the market falls, what order can be used to protect long stock positions? - CORRECT
ANSWER✔✔sell stop orders
,What's the benefit to creating a will? - CORRECT ANSWER✔✔-it reduces estate taxes and
speeds up the probate process
what is a disadvantage of investing in a c corporation? - CORRECT ANSWER✔✔shareholders are
taxed twice
Long straddle - CORRECT ANSWER✔✔-the simultaneous purchase of both a call and put on the
same stock
-these are used if an investor anticipates volatility in the price of a stock
-if the stock rises, the call becomes profitable, but if the stock declines, the put becomes
profitable
A client buys a bond that pays $35 in interest every six months and the bond is selling in the
market for $900. what is the bond's coupon rate? - CORRECT ANSWER✔✔-the coupon rate for a
bond represents the annual interest payment for a bondholder
annual interest = the bond's par value x the coupon rate
annual interest payment would be $70 ($35 semi annual payment x 2)
bonds are assumed to have a par value of $1000
Nominal yield = 7% ($70/$1000 par = 7%)
Your client dies and leaves a sizable investment portfolio. Within two weeks of his death, the
executor of his estate presents the proper documentation to you. She has you sell off the
decedent's portfolio, investing the proceeds in money-market instruments in anticipation of the
, distribution to the heirs of the estate. The value of the holdings declines substantially in the
period between his death and their sale. For estate tax purposes, the assets will be valued: -
CORRECT ANSWER✔✔for estate tax purposes, assets are normally valued at the time of death
Which of the following will a syndicator of a blind pool real estate investment trust include in
the investment policy statement? - CORRECT ANSWER✔✔-a statement which breaks down the
contributions made by limited partners
-blind pool REITs (or non-traded REITs) are pooled investments in RE that give the investment
manager broad authority over investment choices
-the specific location and timing of the investments will not be disclosed in the IPS - but the
syndicator must disclose the break down of contributions made my limited partners
Which TWO of the following choices are differences between exchange-traded funds (ETFs) and
exchange-traded notes (ETNs)?
1. ETNs carry credit risk that is tied to the issuer that backs the note and ETFs do not have issuer
credit risk
2. ETFs may be sold short and ETNs may not
3. ETF returns are based on the performance of an index and ETNs pay a fixed coupon rate
4. ETNs have a maturity date and ETFs do not - CORRECT ANSWER✔✔1.ETNs carry credit risk
that is tied to the issuer that backs the note and ETFs do not have issuer credit risk
and
4. ETNs have a maturity date and ETFs do not
What are ETNs - CORRECT ANSWER✔✔-unsecured debt security
100% correct Answers
What information is required when renewing an advisory contract? - CORRECT ANSWER✔✔-
formula used to calculate the firm's advisory fee
-the amount of the fees
-the length of the contract
When is an exempt reporting investment advisor exempt from registration with the SEC? -
CORRECT ANSWER✔✔-if they manage private funds that have less than $150 million in AUM -
private funds can include hedge funds
Beta vs standard deviation vs alpha - CORRECT ANSWER✔✔beta: measure of non-diversifiable
risk
alpha: measure of diversifiable risk
standard deviation: measure of risk according to MPT
Which metric would allow a financial professional to calculate the fair market price of a bond? -
CORRECT ANSWER✔✔discounted cash flow
-they use this to compare the discounted cash flow value to the current price of the bond to
determine if the bond is overvalued, undervalued, or properly priced
,A 6% coupon bond is selling at a basis of 6.20. If interest rates in the market decline below 6%,
the bond's basis will - CORRECT ANSWER✔✔-decline
a bond's basis is synonymous with its yield-to-maturity. interest rates and YTM on a bond will
move in the same direction.
if market interest rates decline it means that yields will also decline
according to the USA, the application process for an IA includes - CORRECT ANSWER✔✔filing a
completed form adv and form u4for each IAR who will be providing advisory services
the phase of the business cycle that represents the bottom of the economy's decline is -
CORRECT ANSWER✔✔trough
-in this phase, the lower prices of goods should cause the economy to move into a period of
expansion
what type of order may a customer use to protect profits or limit losses in current positons? -
CORRECT ANSWER✔✔stop order
When are market and limit orders used? - CORRECT ANSWER✔✔they are typically used to enter
the market
If the market rises, what order can be used to protect short stock positions? - CORRECT
ANSWER✔✔buy stop orders
if the market falls, what order can be used to protect long stock positions? - CORRECT
ANSWER✔✔sell stop orders
,What's the benefit to creating a will? - CORRECT ANSWER✔✔-it reduces estate taxes and
speeds up the probate process
what is a disadvantage of investing in a c corporation? - CORRECT ANSWER✔✔shareholders are
taxed twice
Long straddle - CORRECT ANSWER✔✔-the simultaneous purchase of both a call and put on the
same stock
-these are used if an investor anticipates volatility in the price of a stock
-if the stock rises, the call becomes profitable, but if the stock declines, the put becomes
profitable
A client buys a bond that pays $35 in interest every six months and the bond is selling in the
market for $900. what is the bond's coupon rate? - CORRECT ANSWER✔✔-the coupon rate for a
bond represents the annual interest payment for a bondholder
annual interest = the bond's par value x the coupon rate
annual interest payment would be $70 ($35 semi annual payment x 2)
bonds are assumed to have a par value of $1000
Nominal yield = 7% ($70/$1000 par = 7%)
Your client dies and leaves a sizable investment portfolio. Within two weeks of his death, the
executor of his estate presents the proper documentation to you. She has you sell off the
decedent's portfolio, investing the proceeds in money-market instruments in anticipation of the
, distribution to the heirs of the estate. The value of the holdings declines substantially in the
period between his death and their sale. For estate tax purposes, the assets will be valued: -
CORRECT ANSWER✔✔for estate tax purposes, assets are normally valued at the time of death
Which of the following will a syndicator of a blind pool real estate investment trust include in
the investment policy statement? - CORRECT ANSWER✔✔-a statement which breaks down the
contributions made by limited partners
-blind pool REITs (or non-traded REITs) are pooled investments in RE that give the investment
manager broad authority over investment choices
-the specific location and timing of the investments will not be disclosed in the IPS - but the
syndicator must disclose the break down of contributions made my limited partners
Which TWO of the following choices are differences between exchange-traded funds (ETFs) and
exchange-traded notes (ETNs)?
1. ETNs carry credit risk that is tied to the issuer that backs the note and ETFs do not have issuer
credit risk
2. ETFs may be sold short and ETNs may not
3. ETF returns are based on the performance of an index and ETNs pay a fixed coupon rate
4. ETNs have a maturity date and ETFs do not - CORRECT ANSWER✔✔1.ETNs carry credit risk
that is tied to the issuer that backs the note and ETFs do not have issuer credit risk
and
4. ETNs have a maturity date and ETFs do not
What are ETNs - CORRECT ANSWER✔✔-unsecured debt security
