Free Series 66 Practice Exam Online

Correct answer: A. $11,025

Compound the first year's ending balance again: $10,000 × 1.05² = $11,025.

• B: $10,500 reflects only one year of interest.
• C: $11,000 uses simple interest instead of compounding.
• D: $12,500 incorrectly treats 5% as a $1,250 annual gain.

Correct answer: B. No strong linear relationship was observed

Correlation near zero indicates little observed linear co-movement; it does not prove independence or say that either asset lacks risk.

• A: A fixed inverse relationship would produce correlation near negative one.
• C: Correlation near zero does not imply either asset has zero volatility.
• D: Correlation does not determine equality of expected returns.

Correct answer: C. 5%

The observations are already ordered. With five values, the third value is the median, so the answer is 5%.

• A: 9.6% is the arithmetic mean, which is affected by the 36% outlier.
• B: Two percent is the second observation, not the middle one.
• D: Thirty-six percent is the maximum, not the median.

Correct answer: D. 0.50

Sharpe ratio equals excess return divided by standard deviation: (9% − 3%) ÷ 12% = 0.50.

• A: 0.25 divides the risk-free rate by standard deviation.
• B: 0.75 divides total return by standard deviation without subtracting the risk-free rate.
• C: 1.33 reverses the relationship by dividing volatility by excess return.

Correct answer: A. 4%

Add the four observations and divide by four: (−6% + 4% + 8% + 10%) ÷ 4 = 16% ÷ 4 = 4%.

• B: Six percent omits the negative observation's effect.
• C: Eight percent is one observation, not the mean.
• D: Sixteen percent is the sum before division by four.