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FINRA Series 65Free Uniform Investment Adviser Law practice test
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10 real FINRA Series 65 practice questions with instant answers and explanations — no account, no credit card, no email. Score yourself, then unlock the full bank of 400 questions whenever you’re ready. The FINRA Series 65 passing score is 72% (94 of 130 scored questions).
A financial planner meets with a 62-year-old client nearing retirement who has a low risk tolerance and needs income. Which of the following investment approaches is most suitable?
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All 10 FINRA Series 65 questions & answers
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Q1. A financial planner meets with a 62-year-old client nearing retirement who has a low risk tolerance and needs income. Which of the following investment approaches is most suitable?
Correct answer: A. Allocating a significant portion to investment-grade bonds and dividend-paying blue-chip stocks
Given the client's age, low risk tolerance, and need for income, a suitable allocation emphasizes capital preservation and income generation.
Q2. The primary purpose of diversifying a client's portfolio across different asset classes and industries is to:
Correct answer: B. Reduce unsystematic (company-specific) risk
Diversification reduces unsystematic risk by spreading investments across unrelated securities; it cannot eliminate systematic (market) risk or guarantee returns.
Q3. When determining an appropriate investment time horizon for a client saving for a child's college education beginning in 3 years, an investment adviser representative should generally recommend:
Correct answer: C. A more conservative asset allocation with reduced equity exposure
A short time horizon of about 3 years calls for reducing exposure to volatile assets and preserving principal, so a more conservative allocation is appropriate.
Q4. Which of the following statements about Section 529 college savings plans is TRUE?
Correct answer: D. Earnings grow tax-deferred and withdrawals are federally tax-free if used for qualified education expenses
529 plans offer tax-deferred growth and tax-free qualified withdrawals; federal deductibility is not available and account owners may choose plans from states other than their own.
Q5. According to Modern Portfolio Theory, the efficient frontier represents:
Correct answer: A. The set of portfolios that provide the maximum expected return for each level of risk
The efficient frontier is the set of portfolios that maximize expected return for a given level of risk, not a single universal portfolio.
Q6. A stock with a beta of 1.5 compared to the overall market would be expected to:
Correct answer: B. Experience price swings approximately 1.5 times greater than the market's movements
Beta measures systematic risk relative to the market; a beta of 1.5 means the stock's price tends to move about 1.5 times as much as the overall market, in the same direction.
Q7. Dollar cost averaging is a strategy in which an investor:
Correct answer: C. Invests a fixed dollar amount at regular intervals regardless of share price
Dollar cost averaging involves investing a consistent dollar amount at regular intervals, resulting in buying more shares when prices are low and fewer when prices are high.
Q8. A client's portfolio consists of 40% invested in a fund with an expected return of 8% and 60% invested in a fund with an expected return of 5%. What is the portfolio's expected return?
Correct answer: D. 6.2%
Weighted average expected return = (0.40 x 8%) + (0.60 x 5%) = 3.2% + 3.0% = 6.2%.
Q9. An adviser is comparing portfolios over the past year. Portfolio X returned 12% with a standard deviation of 10%, while the risk-free rate was 2%. What is Portfolio X's Sharpe ratio?
Correct answer: A. 1.0
Sharpe ratio = (portfolio return - risk-free rate) / standard deviation = (12% - 2%) / 10% = 1.0.
Q10. Under the Investment Advisers Act of 1940, an investment adviser owes clients a fiduciary duty that includes:
Correct answer: B. A duty to act in the client's best interest and disclose material conflicts of interest
Fiduciary duty under the Advisers Act requires acting in the client's best interest and affirmatively disclosing material conflicts of interest, not merely upon request.
Exam facts and objectives sourced from the official FINRA certification page. Last reviewed June 2026.
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