The broadest content section, covering all major investment vehicle types. Fixed income includes Treasury securities, municipal bonds (general obligation vs. revenue), corporate bonds, bond pricing and the inverse relationship with interest rates, bond yields (nominal, current, YTM, YTC), duration as a measure of interest rate sensitivity, and convexity. Equity securities include common stock rights, preferred stock types (cumulative, convertible), dividend date mechanics, stock splits, and equity valuation methods (DDM, P/E, book value). Pooled products include mutual funds (NAV calculation, forward pricing, share classes, expense ratios), ETFs (intraday pricing, creation/redemption mechanism, tax efficiency), closed-end funds, and UITs. Derivatives cover options basics (calls, puts, intrinsic value, time value, breakeven calculations, protective puts, covered calls). Insurance products include fixed and variable annuities (the security/non-security distinction, 1035 exchanges, LIFO tax treatment), and life insurance structures. Alternatives include hedge funds, private equity, and REITs.

Section III: Client Investment Recommendations & Strategies (30% — approximately 39 questions) The practical application section, testing whether candidates can synthesize investment knowledge for specific client situations. Client profiling covers the six KYC dimensions (financial position, objectives, risk tolerance, time horizon, liquidity, tax situation) and investor classifications (accredited investor, qualified purchaser, qualified client). Portfolio theory includes Modern Portfolio Theory, the efficient frontier, correlation and diversification, the Capital Market Line, CAPM (E(R) = Rf + β(Rm − Rf)), the Security Market Line, and risk-adjusted performance measures (Sharpe, Treynor, Jensen's Alpha). Portfolio management strategies include active vs. passive management, growth vs. value investing, the Efficient Market Hypothesis (three forms), fixed income strategies (laddering, barbell, bullet, immunization), duration management, and return calculations (time-weighted vs. dollar-weighted return). Tax and retirement planning covers capital gains (short-term vs. long-term), retirement account types (401(k), 403(b), 457(b), SEP-IRA, SIMPLE IRA, traditional and Roth IRA), contribution limits, Required Minimum Distributions, and 529 plans. ERISA and performance measurement covers the prudent expert standard, ERISA fiduciary duties, prohibited transactions, and performance reporting standards.

Section IV: Laws, Regulations & Guidelines (30% — approximately 39 questions) The highest-leverage section for exam preparation. Covers the Investment Advisers Act of 1940 — the ABC test for IA definition, LATE exclusions, broker-dealer exclusion, exclusion vs. exemption, federal vs. state registration thresholds ($110M mandatory SEC, $100M–$110M buffer, $90M withdrawal), Form ADV parts and delivery timing, custody rules (constructive custody via fee deduction, qualified custodians, surprise examination, net worth requirements), and recordkeeping. Investment Adviser Representative regulation includes IAR definition, registration by firm type (state-registered vs. federal covered), Series 65 exam requirements, professional designation waivers (CFP, CFA, ChFC, PFS, CIMA), and the 2-year re-registration window. Broker-dealer regulation covers the BD/agent structure, Regulation Best Interest (four obligations: Disclosure, Care, Conflict of Interest, Compliance), the IA fiduciary vs. BD Reg BI comparison, and Form CRS. The Uniform Securities Act covers Administrator powers (cease-and-desist without prior notice, 15-day hearing), penalties ($5,000 civil, $5,000/$3yr criminal), securities registration methods (coordination, qualification, notice filing), exempt securities, exempt transactions, and the universal application of antifraud rules. Communications and advertising covers the SEC Marketing Rule — testimonials and endorsements, performance advertising (net required, gross optional), multi-year presentation requirements, soft dollar rules, proxy voting, and contract assignment. Ethics and fiduciary obligations covers fiduciary duty (duty of care, duty of loyalty, ongoing nature), conflict of interest management (eliminate vs. disclose), and prohibited practices (guarantees, churning, front-running, unauthorized trading, insider trading, borrowing restrictions, performance fee qualifications, and the code of ethics requirements for access persons).

Study Priority Framework: Candidates with limited preparation time should allocate resources proportional to exam weight. Laws & Regulations (Section IV) and Client Strategies (Section III) together constitute 60% of the exam and contain largely rule-based content amenable to systematic study. Chapters 13 (IA Regulation) and 18 (Ethics & Fiduciary) are the two highest-yield individual chapters on the entire exam and should be mastered first. The investment vehicle chapters (Section II) reward functional understanding over memorization — focus on the relationships (bond price/yield inverse, duration, yield hierarchy) rather than isolated facts. Economics (Section I) is the lowest weight section and should receive proportionally less study time.

Key Regulatory Numbers Every Candidate Must Memorize: $110M AUM → mandatory SEC registration; $100M–$110M → optional buffer; $90M → withdrawal trigger; $5,000 → civil and criminal fine maximum; 3 years → criminal imprisonment; 15 days → hearing after cease-and-desist; 120 days → annual ADV update; $35,000 → net worth with custody; $10,000 → net worth with discretion; $1,000 → testimonial written agreement threshold; 72% (94/130) → passing score.