Series 65 cheat sheet (NASAA): economics, products, portfolio strategy, taxes, retirement plans, and adviser law/ethics with key formulas, workflows, and quick diagrams.
Use this as a rapid refresher alongside the Study Plan, Glossary, and Official Resources. It focuses on high-yield relationships, formulas, and compliance workflows you can apply under time pressure.
Quick links:
| If the question is really about… | Ask first… | Usually strongest answer direction |
|---|---|---|
| macro / business data | which variable actually drives this asset or company result? | choose the factor with the clearest causal link, not the broadest fact |
| a product recommendation | what risk, cost, tax, or liquidity feature dominates? | match the vehicle to the actual client constraint first |
| portfolio strategy | what is the client trying to solve: growth, income, preservation, inflation, or tax? | start from the objective and constraints before picking a formula or product |
| adviser law | are we testing registration, disclosure, custody, discretion, or fraud? | identify the rule bucket before solving the scenario |
| an ethics / communication stem | what disclosure, record, or conflict control is missing? | disclose, document, and escalate rather than improvise |
flowchart TD
A["Client scenario"] --> B["Collect facts<br/>objectives, risk, time, tax, constraints"]
B --> C["Choose tool<br/>allocation, product, strategy"]
C --> D["Check risks + costs + liquidity"]
D --> E["Check rules<br/>disclosures, conflicts, custody, advertising"]
E --> F["Document rationale + deliver disclosures"]
| Topic | Weight |
|---|---|
| Topic I - Economic Factors and Business Information | 15% |
| Topic II - Investment Vehicle Characteristics | 25% |
| Topic III - Client Investment Recommendations and Strategies | 30% |
| Topic IV - Laws, Regulations, and Unethical Business Practices | 30% |
flowchart LR
A["Inflation"] --> B["Interest rates"]
B --> C["Bond prices"]
B --> D["Equity valuation<br/>(discount rates)"]
E["GDP growth"] --> F["Earnings"]
F --> D
B --> G["FX and capital flows"]
| Statement | What it answers | Common exam cue |
|---|---|---|
| Income statement | profitability over time | margins, EPS, revenue growth |
| Balance sheet | what you own/owe at a point in time | liquidity, leverage |
| Cash flow statement | where cash actually went | quality of earnings |
| Ratio | Formula | Interpretation |
|---|---|---|
| Current ratio | $\frac{CA}{CL}$ | short-term liquidity |
| Quick ratio | $\frac{CA - Inventory}{CL}$ | tighter liquidity |
| Debt-to-equity | $\frac{Total\ Debt}{Equity}$ | leverage |
| ROE | $\frac{Net\ Income}{Equity}$ | profitability vs equity |
| EPS | $\frac{Net\ Income}{Shares}$ | per-share earnings |
| P/E | $\frac{Price}{EPS}$ | valuation multiple |
Future value (single sum)
$$ FV = PV(1+r)^n $$
Present value (single sum)
$$ PV = \frac{FV}{(1+r)^n} $$
Rule of 72 (approx.)
$$ \text{Years to double} \approx \frac{72}{%\ rate} $$
Price vs yield: inverse.
Duration intuition: longer maturity + lower coupon = more rate sensitivity.
Yield formulas (test-friendly)
Current yield
$$ CY = \frac{\text{Annual Coupon}}{\text{Market Price}} $$
Approximate YTM
$$ YTM \approx \frac{\text{Annual Coupon} + \frac{Par - Price}{Years}}{\frac{Par + Price}{2}} $$
Taxable equivalent yield (muni)
$$ TEY = \frac{\text{Muni Yield}}{1 - t} $$
Where $t$ is the investor’s marginal tax rate.
Bond risk cheat sheet
| Risk | Shows up when | What to do |
|---|---|---|
| Interest-rate risk | rates move | match duration to horizon |
| Credit/default risk | issuer weakens | upgrade credit quality / diversify |
| Call risk | rates fall | expect reinvestment risk |
| Liquidity risk | thin markets | demand yield premium |
| Inflation risk | CPI rises | consider real assets / TIPS concept |
Equity valuation anchors (high level)
NAV
$$ NAV = \frac{\text{Assets} - \text{Liabilities}}{\text{Shares Outstanding}} $$
Front-end load (public offering price)
$$ POP = \frac{NAV}{1 - c} $$
Where $c$ is the sales charge as a decimal.
High-yield differences:
Options breakevens
Where $K$ is strike and $P$ is premium.
Payoff intuition
| Position | Max gain | Max loss |
|---|---|---|
| Long call | unlimited | premium |
| Long put | $K - P$ (if stock -> 0) | premium |
| Short call | premium | unlimited |
| Short put | premium | $K - P$ (if stock -> 0) |
Derivatives exam habit: focus on purpose (hedge vs speculate), leverage, and liquidity/complexity.
flowchart TD
A["Client facts"] --> B["Write constraints<br/>time, liquidity, tax, legal"]
B --> C["Set objectives<br/>return + risk"]
C --> D["Select allocation<br/>strategic mix"]
D --> E["Select vehicles<br/>cost, liquidity, tax"]
E --> F["Rebalance rules<br/>time or bands"]
CAPM (high level)
$$ E(R_i) = R_f + \beta_i (E(R_m) - R_f) $$
Sharpe ratio
$$ \text{Sharpe} = \frac{R_p - R_f}{\sigma_p} $$
Beta intuition
Holding period return (HPR)
$$ HPR = \frac{(P_1 - P_0) + I}{P_0} $$
Arithmetic vs geometric mean
When a question is about “who can do what”, start here:
flowchart TD
A["Advice for compensation?"] --> B["Potential IA/IAR"]
B --> C["Registration scope<br/>state vs federal covered"]
C --> D["Disclosures + contracts"]
D --> E["Books/records + supervision"]
E --> F["Ongoing monitoring<br/>updates, conflicts"]
Exam framing is simple:
Not legal or tax advice. Exam outlines and rules can change; confirm current requirements with official sources.
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