Introduction

Analytical Methods is the quantitative toolkit every investment adviser representative needs to evaluate investments and build portfolios.

Exam Weight: 8% (approximately 8 questions)

What You'll Learn

In this unit, you'll cover:

• Time Value of Money: Why a dollar today beats a dollar tomorrow, and how IRR, NPV, and future value drive investment decisions
• Descriptive Statistics: How to measure return, risk, and performance using standard deviation, alpha, beta, the Sharpe ratio, and correlation
• Financial Ratios: How liquidity and leverage ratios reveal a company's short-term health and long-term solvency
• Valuation Ratios: How P/E and P/B ratios help determine whether a stock is overpriced, underpriced, or fairly valued

Why This Matters

Analytical methods are the foundation of every investment recommendation you'll make. Before you can evaluate any security (a bond, a stock, a mutual fund), you need the math to compare alternatives, measure risk, and assess whether the price is right. This unit gives you that math.

The Series 66 assumes you already know what securities are (that's Series 7 territory). Here, the focus is on how to analyze them.

Let's start with the time value of money, the foundation of all investment analysis.