Series 65 Exam Questions & Answers 2026 (1–10)

Question 1

During which phase of the business cycle does unemployment typically reach its lowest point and consumer spending peak?

TheoryPractice · Accepted Answer

Peak. The peak is the high point of a business cycle where economic output, employment, and consumer spending are at their maximum before the economy begins to contract.

Question 2

Which of the following BEST describes Gross Domestic Product (GDP)?

TheoryPractice · Accepted Answer

The total market value of all final goods and services produced within a country's borders in a specific time period. GDP measures the total market value of all final goods and services produced within a country's geographic borders during a defined period, distinguishing it from GNP which tracks output by a nation's citizens.

Question 3

A client holds a $1,000 bond paying a 5% annual coupon. If market interest rates rise to 7%, what happens to the bond's market price?

TheoryPractice · Accepted Answer

The price falls below $1,000 because investors demand a higher yield than the coupon offers. Bond prices and interest rates move inversely; when market rates exceed a bond's coupon rate, the bond must trade at a discount so that its total return equals the prevailing market yield.

Question 4

On a company's balance sheet, which of the following is classified as a current liability?

TheoryPractice · Accepted Answer

Accounts payable due within 30 days. Current liabilities are obligations expected to be settled within one year, and accounts payable — amounts owed to suppliers for goods or services already received — are a classic example.

Question 5

The Federal Reserve raises the federal funds rate. This action is an example of:

TheoryPractice · Accepted Answer

Contractionary monetary policy. Monetary policy is set by the Federal Reserve, and raising the federal funds rate increases borrowing costs to slow spending and reduce inflationary pressure, making it contractionary monetary policy.

Question 6

An investor wants to know how much she must deposit today to accumulate $50,000 in 10 years, assuming a 6% annual return compounded annually. Which concept BEST describes this calculation?

TheoryPractice · Accepted Answer

Present value of a lump sum. Discounting a known future lump sum back to today using a required rate of return is the definition of present value (PV) of a lump sum, expressed as PV = FV / (1 + r)^n.

Question 7

A nation reports that its Consumer Price Index rose from 240 to 252 over one year. What is the approximate inflation rate for that period?

TheoryPractice · Accepted Answer

5.0%. The inflation rate is calculated as (252 - 240) / 240 = 12 / 240 = 0.05, or exactly 5.0%, representing the percentage change in the price level over the period.

Question 8

Which of the following fiscal policy actions would MOST likely be used to stimulate an economy experiencing a severe recession?

TheoryPractice · Accepted Answer

Decreasing income tax rates and increasing government spending. Expansionary fiscal policy — implemented by Congress and the President — involves cutting taxes to boost disposable income and increasing government spending to inject demand into a sluggish economy.

Question 9

A company's income statement shows net sales of $800,000, cost of goods sold of $480,000, and operating expenses of $160,000. What is the company's operating income?

TheoryPractice · Accepted Answer

$160,000. Operating income equals gross profit minus operating expenses; gross profit is $800,000 - $480,000 = $320,000, and $320,000 - $160,000 = $160,000 in operating income.

Question 10

An investor purchases an annuity that will pay $5,000 per year for 5 years, with the first payment beginning one year from today. This is BEST described as:

TheoryPractice · Accepted Answer

An ordinary annuity, because payments occur at the end of each period. An ordinary annuity (also called an annuity in arrears) is defined as a series of equal payments made at the end of each period, consistent with the first payment occurring one year from today.

Series 65 Exam Questions & Answers 2026 (1–10)

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