One-Page Cheat Sheet

This is the whole book at a glance. It assumes you have already worked through the units; each line is a memory jog, not a first lesson. If a line reminds you that you forgot something, go back to that unit's rapid-fire sheet.

Foundation (Economic Factors, 15%)

• Basic Economic Concepts: The business cycle moves trough, expansion, peak, contraction, and everything else keys off where you are on it: a recession is two down quarters of gross domestic product, a depression six. Monetary policy is the Fed steering money supply and rates through open market operations, the discount rate, and reserve requirements; fiscal policy is Congress and the President steering spending and taxes, where a deficit is expansionary and a surplus contractionary. Inflation erodes fixed-income value and helps borrowers, an inverted yield curve warns of recession while credit spreads widen in downturns, indicators either lead, coincide with, or lag the cycle, and a strong dollar quietly eats the foreign returns of a U.S. investor.
• Analytical Methods: Time value of money is the backbone: future value compounds, present value discounts, and the Rule of 72 approximates doubling time. Accept a positive net present value in dollars or an internal rate of return above the hurdle rate in percent, and prefer net present value when they conflict. Statistics split into central tendency (mean, median, mode) and risk: standard deviation for total risk, beta for systematic, Sharpe for return per unit of total risk, alpha for excess return, and correlation for diversification. Round it out with liquidity ratios (current, quick), the debt-to-equity leverage ratio, and the price-to-earnings and price-to-book valuation ratios.
• Types of Risk: Risk splits two ways: systematic risks (market, interest rate, inflation, currency, reinvestment, captured by PRIME) hit the whole market and cannot be diversified away, mitigated only by hedging or asset allocation; unsystematic risks (credit, financial, legal/regulatory, issuer-specific, plus liquidity, political, and call) are company-specific and diversified away by holding many issuers. Beta measures systematic risk. Opportunity cost is a foregone gain, not a loss. In liquidation, debt always beats equity: secured, unsecured, subordinated, preferred, then common last, and higher priority always means lower risk and lower return.
• Financial Reporting: Three statements: the balance sheet is a point-in-time snapshot where Assets equal Liabilities plus Owners' Equity, the income statement runs top line (revenue) down to bottom line (net income) over a period, and the statement of cash flows sorts activity into operating, investing, and financing (interest paid and dividends received are operating, dividends paid are financing). Public companies keep the books on accrual under generally accepted accounting principles, so strong net income can hide weak cash, which is why operating cash flow adds depreciation and other non-cash items back to net income. Auditors sign off with the clean unqualified opinion at the top and qualified, adverse, or disclaimer below it, and the SEC collects the audited annual report, the unaudited quarterly report, and the 4-business-day current report for material events.

Securities Fundamentals (Investment Vehicles, 25%)

• Cash and Cash Equivalents: Cash equivalents are the safest, most liquid slice of a portfolio, built to preserve principal. Insured bank deposits (demand deposits and certificates of deposit) carry Federal Deposit Insurance Corporation coverage of $250,000 per depositor, per bank, per ownership category, but that insurance protects against bank failure, not secondary-market losses on negotiable or brokered certificates. Money market securities mature in one year or less and are never insured: commercial paper is unsecured corporate notes exempt from SEC registration up to 270 days, Treasury bills are government-backed discount securities exempt from state and local tax, and money market mutual funds chase a $1.00 net asset value that is a target rather than a guarantee.
• Fixed Income Securities: Fixed income is debt sorted by issuer. Treasuries have no default risk and are state-tax-exempt, with Treasury bills sold at a discount and only notes and bonds paying coupons. Agencies are fully taxable, and only Ginnie Mae carries full faith and credit; mortgage-backed pass-throughs pay monthly and face opposing prepayment and extension risk. Corporates pay $1,000 par with debt always ranking above equity. Municipals deliver federally tax-exempt interest split into general obligation (taxing power, voter approval) and revenue (project-backed) bonds, and their capital gains stay taxable. Nail each issuer's backing and tax treatment, remember Treasury Inflation-Protected Securities and STRIPS phantom income, and this unit is yours.
• Fixed Income Characteristics: Bond prices and yields see-saw in opposite directions: coupon above market rate means a premium (price over par, amortized down), coupon below means a discount (price under par, accreted up), and every bond converges to par at maturity. The yield ladder climbs for discounts (nominal, then current yield, then yield to maturity, then yield to call) and dips in reverse for premiums, with yield to worst always the lowest; use yield to call on premium callable bonds. Duration measures rate sensitivity (roughly the percent price move per 1% rate change), rising with longer maturity, lower coupon, and lower yield, and equaling maturity for zeros. Ratings gate at investment grade (BBB-/Baa3), spreads widen in recessions, and interest rate risk trades off inversely against reinvestment risk, balanced by immunization.
• Equity Securities: Common stock is ownership: voting rights, unlimited upside, limited liability, and a last-in-line residual claim, with dividends only if the board declares them and cumulative voting the minority shareholder's friend. Preferred stock is the hybrid: fixed dividend, priority over common, usually no vote, bond-like sensitivity to interest rates, and flavors of cumulative, participating, convertible, callable, and floating rate. Investor-friendly features cut the dividend rate while the callable feature raises it. American Depositary Receipts hold foreign shares in dollars but keep currency risk, and in liquidation every creditor is paid before any equity, preferred before common.
• Equity Characteristics: Only the board declares dividends, and you must buy before the ex-dividend date (the record date under T+1 settlement) to collect. Cash dividends are taxed on receipt while stock dividends just lower your per-share cost basis; qualified dividends earn capital-gains rates, and cumulative preferred arrearages clear before any common dividend. Cumulative voting helps the minority, statutory helps the majority, preemptive rights guard common-stock ownership percentage, and common stock stands last in liquidation. Restricted and control securities carry holding periods (6 months reporting, 1 year non-reporting), affiliate volume limits, and Form 144 filings, while incentive stock options go to employees only with alternative minimum tax at exercise and non-qualified options tax the spread as ordinary income.
• Equity Valuation Methods: Two schools value stocks: fundamental analysis studies the company's financials to find intrinsic value over the long term, while technical analysis studies only price and volume for short-term direction, so sort each tool to its school. Fundamental ratios include price-to-earnings and price-to-book, plus book value per share (subtract preferred stock first) and the dividend payout ratio. The dividend discount model values a stock as the present value of future dividends, with the Gordon Growth Model dividing next year's dividend by required return minus growth (and breaking when growth meets or exceeds return). Discounted cash flow is the broader model, using free cash flow for any company, where a higher discount rate lowers value and terminal value dominates the total.
• Equity Public Offering: An initial public offering is a company's first stock sale in the primary market, so proceeds go to the issuer: file a registration statement, wait out the minimum cooling-off period (indications of interest and the red herring, but no money), then deliver the final prospectus once the SEC declares the registration effective, which is never an "approval." Underwriters take the issue on firm commitment (buy it all as principal) or best efforts (sell as agent, unsold returns to the issuer). A secondary offering resells existing shares so the selling shareholders, not the company, get paid and no dilution occurs, while a follow-on issues new dilutive shares to the company. A special-purpose acquisition company is a blank-check shell that raises offering cash to buy an unnamed target, and its investors can redeem regardless of how they vote.

Advanced Securities (Investment Vehicles, 25%)

• Pooled Investments: The Investment Company Act of 1940 defines management companies (open-end and closed-end funds), unit investment trusts, and obsolete face-amount certificates. Open-end mutual funds continuously issue and redeem shares directly with the fund, always at net asset value using forward pricing, and redeem within 7 days; they cannot be margined or shorted. Closed-end funds issue fixed shares that trade on an exchange at a premium or discount to net asset value and can be margined and shorted. Unit investment trusts hold a fixed, unmanaged portfolio under a trustee with a termination date and no management fee. Exchange-traded funds are legally open-end funds or unit investment trusts but trade intraday, with authorized-participant in-kind creation keeping them tax-efficient and priced near net asset value.
• Pooled Investment Characteristics: The expense ratio captures ongoing costs (management, distribution, admin) but never sales loads, and the sales charge is figured on the public offering price, not net asset value. Class A charges a front-end load for large, long-term investors, Class B a declining back-end charge that often converts to A, and Class C level fees forever for short holds. Fund capital gains distributions are long-term based on the fund's holding period, real estate investment trust payouts are ordinary income under the 75/75/90 rules, and fund exchanges within a family are taxable. Match the benchmark to the fund's style, check manager tenure, and this two-question unit answers itself.
• Derivative Securities: A derivative draws its value from an underlying asset. A call is the right to buy 100 shares and a put the right to sell, with buyers holding rights and writers holding obligations, all issued and guaranteed by the Options Clearing Corporation, which erases counterparty risk. Only in-the-money options have intrinsic value, and "call up, put down" fixes both direction and break-even. The corporation itself issues rights (short-term, below-market, anti-dilution) and warrants (long-term, above-market, a bond sweetener), both dilutive when exercised. Futures and forwards obligate both parties: futures are standardized, exchange-traded, cleared, and carry a performance-bond margin, while forwards are private, customizable, and stuck with counterparty risk.
• Derivative Characteristics: Derivatives cost a premium (options) or margin, a performance bond, for futures. Option premium is intrinsic value plus time value, and time decay always favors the seller. The two adviser hedges are the protective put (long stock plus long put, insurance that keeps unlimited upside) and the covered call (long stock plus short call, income that caps upside at strike plus premium). Long options risk only the premium paid; naked call writing is unlimited loss while naked put loss is capped at strike minus premium. Forwards carry counterparty risk, futures do not, and every recommendation must match the client under the adviser's fiduciary duty.
• Alternative Investments: Alternative investments are non-traditional products, each with a signature risk. Limited partnerships pass income and losses through on a K-1 and lock capital up for years, so illiquidity disqualifies near-retirement clients; the general partner has unlimited liability while the limited partner does not, and a limited partner who manages loses that shield. Exchange-traded notes and structured products are unsecured issuer promises, so credit risk is the point, and structured-product principal protection holds only at maturity. Leveraged and inverse funds reset daily, so compounding decays value over any period longer than a single session, making both intraday tools rather than buy-and-hold holdings. Match every product to time horizon, liquidity needs, and risk tolerance.
• Insurance Based Products: The word "variable" decides everything: variable annuities, variable life, and variable universal life put money in a separate account where the owner bears investment risk, making them securities sold by prospectus and requiring both a securities and an insurance license, while fixed annuities, indexed annuities, term, whole, and universal life sit in the general account where the insurer bears the risk and only state insurance departments regulate. Annuity gains are always ordinary income, taxed last-in-first-out on accumulation-phase withdrawals and by the exclusion ratio at annuitization, with a 10% penalty before age 59 1/2, whereas life insurance death benefits pass to beneficiaries income-tax-free. Know who bears the risk, know the account type, and every question sorts itself out.
• Other Assets: Commodities split into hard (mined) and soft (grown) and answer to the Commodity Futures Trading Commission, not the SEC. Precious metals generate no income and hedge both inflation and falling equities; physical metal and metal-backed funds are taxed as collectibles at up to 28%, regulated futures at a blended 60/40 rate regardless of holding period, and producer stocks as ordinary equities. Contango means futures above spot, backwardation below. Bitcoin is a commodity because it fails the fourth Howey prong; other tokens are securities when the Howey test is met, whatever the label. The tax service treats every digital asset as property, so each swap is taxable, and exchange holdings carry no deposit or investor-protection insurance.

Clients (Client Recommendations, 30%)

• Client Types: Individuals are natural persons; a sole proprietorship is a business with no liability shield. General partnerships pass income through but leave partners fully liable, while limited liability companies and S corporations give both protection and pass-through, and C corporations trade double taxation for protection and perpetual life. S corporations cap shareholders at 100 U.S. owners with one stock class. Trusts run on grantor, trustee, and beneficiary: revocable avoids probate but stays taxable, irrevocable escapes the estate, testamentary is born from a will, and a charitable remainder trust versus a charitable lead trust are mirror images. Estates are temporary and adviser-facing through the executor. Private foundations must distribute 5% and pay excise tax, public charities and donor advised funds do not, and a donor advised fund donor only recommends.
• Client Profile Development: Build the full profile before any recommendation: identity through the Customer Identification Program, then the financial situation, risk tolerance, time horizon, objectives, liquidity needs, and constraints, all captured in the Investment Policy Statement. Match recommendations to that profile and let the most restrictive factor govern every conflict: risk capacity overrides willingness, actual financials override stated preferences, and ambiguity defaults to conservative. Guaranteed income frees the portfolio for growth, longer horizons permit more equity, and nonfinancial factors like values, biases, and life events shape the plan too. Update beneficiaries and the profile immediately after any life event, and as a fiduciary always act in the client's best interest.
• Special Account Types: Specialty accounts split by purpose and by who holds the reins. 529 plans and Coverdell education savings accounts fund education tax-deferred with tax-free qualified withdrawals, but the 529 owner keeps control forever while Coverdell adds a $2,000 cap and contributor income limits. Uniform Gifts to Minors Act and Uniform Transfers to Minors Act custodial gifts are irrevocable: the minor owns the assets and takes full control at the age of majority, and they count as student assets for aid. Health savings accounts are the triple-tax-advantage account, tied to a high-deductible health plan, portable, and penalty-free for non-medical use after age 65. Lock in the control rules and the numbers, and this unit answers itself.
• Ownership and Estate Planning Techniques: Titling drives control and inheritance: joint tenants with right of survivorship, tenancy by the entirety, and community property pass to survivors and skip probate, while tenants in common goes to the estate through probate, and community property alone gets the double step-up in basis. Revocable trusts avoid probate but keep assets in the taxable estate; irrevocable trusts cut estate tax and shield assets but cost the grantor all control. Testamentary trusts still probate; living trusts do not. Beneficiary designations and transfer-on-death accounts override the will, qualified domestic relations orders split employer plans penalty-free in divorce, and donor advised funds trade an irrevocable gift for an immediate deduction and later advisory grants.
• Tax Considerations: Holding period drives everything: one year or less is short-term ordinary income, more than a year earns the preferential 0%, 15%, or 20% long-term rate that qualified dividends also share, while real estate investment trust dividends and master limited partnership distributions stay ordinary. Harvest losses to offset gains dollar-for-dollar, then up to $3,000 against ordinary income, but watch the wash-sale rule, which defers any loss on a substantially identical repurchase within 30 days by adding it to the new basis. Cost basis starts at purchase price plus fees; inherited assets step up to fair market value while gifts carry over the donor's basis. Layer on the alternative minimum tax for incentive-stock-option exercises and private activity bonds, and this unit answers itself.
• Retirement Plans: A Traditional individual retirement account (IRA) gives a possible upfront deduction, tax-deferred growth, and ordinary-income taxation at distribution, while a Roth IRA is funded with after-tax dollars, grows tax-free, and pays qualified distributions tax-free with no lifetime required minimum distributions. Employer plans span 401(k), 403(b), 457(b), SEP, and SIMPLE, where defined benefit shifts investment risk to the employer and defined contribution shifts it to the employee. Lock in the shared IRA contribution limit and catch-up at age 50 and older, the 10% penalty before age 59 1/2, the required-minimum-distribution start age, and the 60-day indirect-rollover window with its 20% employer-plan withholding, and this heavily tested unit answers itself.
• ERISA Issues: The Employee Retirement Income Security Act (ERISA) governs private employer retirement plans and is enforced by the Department of Labor, not the SEC, so government, church, and individual-IRA plans are out. A fiduciary is defined by function, and owes loyalty, prudence under the higher prudent expert standard, diversification, and adherence to compliant plan documents. An investment manager with full discretion takes on liability that an advice-only fiduciary shares; an Investment Policy Statement is optional but binding once adopted. Prohibited transactions with parties in interest are strict liability with narrow exemptions, while the participant-directed safe harbor shields fiduciaries from participants' own investment choices but never from the duty to select and monitor the options prudently.

Strategy (Client Recommendations, 30%)

• Capital Market Theory: Modern portfolio theory builds the efficient frontier by combining assets that are not perfectly correlated, reducing risk at any correlation below +1.0; individual securities plot inside the frontier because they carry unsystematic risk, and nothing plots above it. The capital asset pricing model prices a security off systematic risk alone, and alpha is the return above that expected value. Standard deviation is total risk, beta is systematic risk, and R-squared tells you when beta is trustworthy. The security market line flags undervalued (above) versus overvalued (below), the capital market line uses standard deviation for efficient portfolios only, and the efficient market hypothesis (weak, semi-strong, strong) points toward passive index investing.
• Portfolio Management Strategies: Asset allocation beats security selection. Strategic allocation is the long-term, client-driven target you rebalance back to; tactical allocation is a short-term, market-driven deviation that returns to target. Active management tries to beat a benchmark at higher fees and turnover while most funds underperform after costs, and passive management just matches the index cheaply on the efficient market hypothesis. Growth chases earnings and wins in expansions, value hunts bargains and wins in recoveries. Diversification kills unsystematic risk but never market risk, dollar-cost averaging buys more shares when prices fall, and protective puts guard downside while covered calls sell away upside for income.
• Trading Securities: A market order guarantees execution but not price, a limit order guarantees price but not execution, a stop becomes a market order at its trigger, and a stop-limit becomes a limit order that may gap through. Buy limits and sell stops go below the market; sell limits and buy stops go above. Investors buy at the ask and sell at the bid, paying the spread on every round trip. Most securities settle T+1; margin runs on 50% initial (Regulation T), 25% maintenance, and a $2,000 floor, with short sales confined to margin accounts. Commission signals agency, markup or markdown signals principal, market makers always trade as principal, and best execution means reasonable diligence, not a guaranteed best price.
• Portfolio Performance Measures: Total return and holding period return use one formula, ending minus beginning plus income over beginning, and multi-year returns annualize geometrically, never by dividing by the years. The Sharpe ratio rewards excess return per unit of total risk (standard deviation), while alpha measures skill against the expected return built on beta. Time-weighted return grades the manager and is required by the Global Investment Performance Standards; dollar-weighted return equals the internal rate of return and grades the investor's actual, cash-flow-timed experience. Subtract inflation for real return, apply one minus the tax rate for after-tax, and divide by one minus the tax rate for tax-equivalent yield. Match the benchmark to the portfolio, remembering the Dow is price-weighted.

Legal Framework (Laws & Ethics, 30%)

• Securities and Issuer Regulation: A security is anything that passes the Howey Test (money in a common enterprise, profits from others' efforts), so variable annuities are in and fixed annuities are out. States register securities three ways: filing (notification, seasoned issuers, auto-effective), coordination (paired with the SEC, the offering workhorse, auto-effective), and qualification (state-only, effective only when the Administrator orders it), and all three last one year. Exempt securities are exempt by what they are, exempt transactions by how they are sold, and federal covered securities escape state registration entirely under the National Securities Markets Improvement Act, but nothing, ever, is exempt from antifraud.
• Investment Adviser Regulation: An investment adviser is anyone who clears the ABC test: advice about securities, as a regular business, for any compensation, direct or indirect. Some persons are excluded from the definition outright (lawyers, accountants, teachers, engineers when incidental; domestic banks; broker-dealers with no special compensation; publishers of general circulation), while others meet the definition but are exempt from registering (de minimis, private fund advisers). Registration splits on assets under management: under $25 million is state-only, $25 million to $100 million is the mid-size state band, and $110 million and above is federal covered, with a $90 million / $110 million buffer that stops firms from flipping back and forth. Federal covered advisers only notice file with the states, and antifraud follows everyone no matter their status.
• Investment Adviser Representative Regulation: An investment adviser representative is any individual who makes recommendations, manages accounts, determines advice, solicits advisory services, or supervises those functions; performing any one triggers registration, while solely clerical staff are excluded. Representatives always register with the state, never the SEC, filing Form U4 in every state where they keep a place of business. The exam-favorite trap: a representative of a federal covered adviser still registers at the state level even though the adviser itself registers with the SEC. Pass the Series 65 (or Series 66 with the Series 7 co-requisite), or waive the exam with a qualifying designation, and this unit answers itself.
• Broker-Dealer Regulation: A broker-dealer effects securities transactions as agent (commissions) or dealer (markups plus the spread), and can never wear both hats in one trade. Agents, issuers, and banks are excluded from the definition, so they never register. State registration is dodged only with no place of business in the state, either serving institutions exclusively or a snowbird existing client temporarily visiting. Register with Form BD through the Central Registration Depository; registration is effective at noon on the 30th day, expires December 31, and withdrawal leaves the Administrator jurisdiction for one more year.
• Agent Regulation: An agent is always an individual (natural person) who represents a broker-dealer or issuer in effecting securities transactions; no entity can be an agent, and mere solicitation is enough to trigger the definition. Registration runs on Form U4 through the Central Registration Depository, is tied to a specific employer, expires December 31st, and defaults to effective on the 30th day at noon after filing. Keep Form U4 current within 10 business days for disqualifying events and 30 days for everything else, and remember that on any transfer the agent, the old firm, and the new firm all notify the Administrator at once.
• Remedies and Administrative Provisions: The Administrator investigates, subpoenas, makes rules, and issues cease-and-desist orders with or without a hearing, but only a court grants injunctions, imposes fines, orders restitution, or imprisons. Administrative actions (denial, suspension, revocation) demand both public interest and a listed ground; summary suspensions still owe a hearing within 15 days. Civil liability lets a defrauded buyer rescind, recovering price plus interest minus income, under a statute of limitations of the earlier of 3 years from sale or 2 years from discovery, with a 30-day rescission-offer window. Criminal penalties follow the 5-5-3 rule (5-year statute of limitations, $5,000 fine, 3 years imprisonment), and judicial review runs 60 days without an automatic stay.

Professional Excellence (Laws & Ethics, 30%)

• Client Communication: Investment advisers are fiduciaries who must disclose every material fact, and omission is fraud. The Form ADV Part 2A brochure goes to clients before or at signing; a state adviser delivering at signing must give a 5-business-day penalty-free termination right, while the 48-hour advance option needs none. File the annual amendment within 90 days of fiscal year-end and deliver the updated brochure within 120. Never guarantee performance, never let a signed waiver stand, and treat a majority-ownership change as an assignment needing consent. The marketing rule now permits testimonials with disclosure federally, but most states still forbid them, and registration is never an endorsement.
• Ethical Practices and Fiduciary Obligations: An investment adviser is a fiduciary owing a duty of care (best-interest, know-your-client advice) and a duty of loyalty (client first, all conflicts disclosed), and that duty cannot be waived. Custody means any access to client assets (fee deduction counts), and once it exists you need a qualified custodian, quarterly client statements, Form ADV reporting, and an annual surprise exam at an irregular time. Compensation must be disclosed up front, performance fees are limited to qualified clients, and soft dollars fit only inside the safe harbor without defeating best execution. Agency cross transactions run on prospective consent plus per-trade confirmations. Lock in the prohibited practices (insider trading, manipulation, churning, commingling, structuring) and the vulnerable-adult 15-business-day hold, and this heavy ethics unit answers itself.

That's the whole exam on one page. If you can read each line and hear the full unit behind it, you're ready.