Open Exam Prep

Open Exam Prep

By Ran Chen, EA, CFP®EducationCourses
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Open Exam Prep episodes

  • [Series 65] 18, US Treasury Securities
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The key maturity and interest payment differences between T-bills, T-notes, and T-bonds.
    - The unique tax treatment of Treasury securities: federally taxable but exempt from state and local taxes.
    - How TIPS provide inflation protection and the associated concept of 'phantom income'.
    - Why STRIPS are not issued directly by the Treasury and their high sensitivity to interest rate risk.
    - That U.S. Treasuries are considered the 'risk-free' benchmark because they are backed by the full faith and credit of the U.S. government, eliminating default risk.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    3 min
  • [Series 65] 17, Cash Equivalents and Money Market Instruments
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The key features of Treasury Bills, including their risk-free nature and issuance at a discount.
    - The characteristics of commercial paper, such as its 270-day maximum maturity for SEC exemption.
    - The role of Negotiable CDs as tradable, interest-bearing bank deposits.
    - How Banker's Acceptances facilitate international trade through a bank's guarantee.
    - The function of Repurchase Agreements as collateralized short-term loans.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 16, Currency Risk and Political Risk
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - That a strengthening U.S. dollar negatively impacts the returns of a U.S. investor holding foreign securities like ADRs.
    - The critical distinction between sovereign risk (a government defaulting on its debt) and regulatory risk (a government changing laws).
    - Why American Depositary Receipts (ADRs), despite trading in U.S. dollars, are fully exposed to currency exchange risk.
    - The primary exam-tested strategy to hedge against a decline in a foreign currency's value is buying put options on that currency.
    - The mnemonic "Strong Dollar Shrinks" to remember that a stronger U.S. dollar reduces the value of foreign investment returns.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 15, Inflation Risk Liquidity Risk and Opportunity Cost
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - Inflation risk, or purchasing power risk, means an investment's nominal return may not outpace rising costs, leading to a negative real return.
    - The Series 65 exam tests inflation risk through suitability scenarios where conservative, fixed-income investments jeopardize a client's long-term financial goals.
    - Liquidity risk is directly measured by the bid-ask spread; a wider spread signals difficulty in selling an asset quickly without a significant price reduction.
    - A common exam trap involves recommending illiquid investments like non-traded REITs or limited partnerships to clients with stated short-term cash needs.
    - Opportunity cost is the potential return missed by choosing one investment over another, often tested as an adviser's failure to recommend a more suitable, higher-returning alternative to holding excess cash.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 14, Interest Rate Risk and Reinvestment Risk
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The inverse relationship between interest rates and existing bond prices.
    - How duration measures a bond's sensitivity to interest rate changes.
    - Why bonds with long maturities and low coupons have the highest interest rate risk.
    - What reinvestment risk is and why it occurs when interest rates fall.
    - Common exam traps that test the opposing nature of interest rate risk and reinvestment risk.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 13, Types of Risk Systematic vs Unsystematic
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - Systematic risk, also known as market risk, is non-diversifiable and impacts the entire market through factors like interest rates and inflation.
    - Unsystematic risk is unique to a specific company or industry and can be significantly reduced through diversification.
    - Beta is the specific metric used to measure a security's systematic risk, or volatility, in relation to the overall market.
    - Diversification is the key strategy to mitigate unsystematic risk, but it does not protect against systematic risk.
    - The exam will test your ability to differentiate between business risk (operational issues) and financial risk (debt-related issues), both of which are types of unsystematic risk.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 12, Descriptive Statistics and Correlation
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - How to differentiate between mean, median, and mode in a set of investment returns and why the median is crucial when outliers are present.
    - That standard deviation is the primary measure of an investment's volatility and risk on the Series 65 exam; a higher number means higher risk.
    - The significance of the normal distribution, where approximately 67% of returns are within one standard deviation and 95% are within two.
    - The role of the correlation coefficient, from -1 to +1, in measuring how two investments move in relation to each other.
    - Why combining assets with low or negative correlation is the key to effective portfolio diversification and risk reduction.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 11, NPV IRR and Internal Rate of Return
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The Net Present Value (NPV) decision rule: Accept projects with a positive NPV and reject those with a negative NPV.
    - The Internal Rate of Return (IRR) decision rule: Accept projects where the IRR is greater than the required rate of return or hurdle rate.
    - For the Series 65 exam, NPV is considered the superior capital budgeting method, especially for comparing mutually exclusive projects.
    - Exam questions test your understanding of the decision rules and the relationship between variables, not complex calculations.
    - A key mnemonic: "IRR Greater, Go!"—if the IRR is greater than the required rate, accept the project.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min
  • [Series 65] 10, Time Value of Money Calculations
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The inverse relationship between discount rates and present value; a higher rate leads to a lower present value.
    - Why an annuity due, with payments at the beginning of a period, is always more valuable than an ordinary annuity, which has payments at the end.
    - How to apply the Rule of 72 to quickly estimate the time or interest rate needed to double an investment's value.
    - Common exam traps, such as confusing an annuity due with an ordinary annuity and miscalculating periods for semi-annual compounding.
    - The conceptual difference between future value (compounding) and present value (discounting) as tested on the Series 65 exam.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    3 min
  • [Series 65] 9, Financial Ratios and Analysis
    This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.
    In this episode you will learn:
    - The current ratio measures short-term liquidity, while the quick (acid-test) ratio provides a stricter measure by excluding less-liquid inventory.
    - The debt-to-equity ratio reveals a company's financial leverage and risk, with a higher ratio indicating greater reliance on debt.
    - The P/E ratio values a company based on its current earnings, but must be compared with companies in the same industry to be meaningful.
    - The PEG ratio enhances the P/E ratio by factoring in earnings growth, offering a more complete picture of a stock's valuation.
    - Return on Equity (ROE) measures a company's profitability by showing how effectively it generates profit from shareholder investments.
    For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep
    4 min

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