Series 86 & 87

Hi Guys,

I recently took my series 7 and passed it. I have heard horror stories about the Series 87 - on how confusing it is and how they try to trip you. A few peers took it multiple times before passing it. I was wondering if that is the case, has anyone been in this situation before where you thought the Series 87 was hard? What books /outside resources did you use other than the ones the firm provides? Thanks in advance

 

thats really funny that you just brought this topic up...i failed the 87 last Tuesday by one question and failed the 86 about a month ago by one question too! I almost through the computer through the testing room window after failing the 87. I will admit that I may not have known the 86 material as well as I should have, but I did know the 87 material backwards and forwards. I scored very well on the practice exams. There is a complete disconnect between the questions STC has in the study guide and the actual test questions. The test questions are much more vague and confusing. I do realize that I can't use that as an excuse.

If you know any other material besides STC, feel free to pass that info along. I am attending a classroom training for 86 sometime in December so hopefully that will boost the score. It is just hard to believe after I passed the Series 7 and 66 with flying colors using Kaplan. F'ing STC!

Smokey, this is not 'Nam, this is bowling. There are rules.
 

I've failed the 86 twice now by one question. I feel like the study materials are not adequate for the test. What was the class you took in December? Did it help you? Do you have any ideas for extra study guides/tutors?

 

That is what I have heard from other associates too. That nothing in the test materials reflects the actual test. Its really frustrating that we spend all this time and work and after that we depend on stupid STC and their materials. I don't think that there are any materials out there except for the STC materials. People have been talking about this book http://www.mo-media.com/series87/ http://www.aitraining.com/series87.htm

I was also thinking of taking the class. I think STC just wants people to spend more money on top of their materials. Isnt the class like $ 450 ? Is your bank paying for it or are you?

 

I had the same experience with my STC materials and the 87...complete disconnect. Although, I was still able to pass the exam. At the end of the day it's a lot of common sense.

As far as the 86 goes, that was by far the harder of the two exams. Despite the STC materials being a little off base, I recommend taking as many of the practice exams as you can before taking the actual test. Use their preferred method for studying as well (study the actual material, take the q&a exams, review concepts you don't understand from each section, take actual exams a few days later). If you're scoring consistently in the 75-85 range, you should be able to pass the actual exam.

Hope this helps.

 

It's been a couple of years, but I passed both tests in one shot. The STC materials my BB provided were useful, but not nearly as useful as their Series 7 stuff. I also took STC's review course. The bank paid.

Take the practice tests, get comfortable and use some common sense. You should be fine.

 

Its not bad at all. Just do the practice exams and you'll do fine. the material is so extensive compared to the 86 and 87 that they dont really try to trip you as much they do on the 86 or 87. good luck

 

I'm gonna take the 86 and 87 over the next few weeks and was wondering how much people studied for the two exams.

The 87 is only 50 questions and I have the new materials (released in the past few weeks) from STC.

The 86 has far more material to cover, but is mostly silly valuation stuff that we all know.

So, what did you guys do.

--There are stupid questions, so think first.
 

Do not buy the book from Johnson lipman corporation. It's the same book from STC and they sell at the higher price. If you buy it from STC, we will get the online practice exam as well as the book at a cheaper price. Johnson Lipman Corporation's website is totally misleading by not indicating this fact under the book information.

 

If you have CFA I and II you can apply for an exemption to the series 86. It is almost always granted, but depends on what you have been doing since you took the CFA II (you must be continuously employed in finance).

--There are stupid questions, so think first.
 

As a note, the 87 was a complete joke.

I read through the materials once, took the practice exams (got in the low 70's) and managed to get well over 80% on the actual exam in about a half hour. It was easier than both the 7 and 63 exams.

--There are stupid questions, so think first.
 
Best Response

Discounted cash flow is just looking at future cash flows and seeing what they're worth today. Problem is that you can't really project an infinite number of cash flows in the future, which you'd have to do if you are assuming that the company you're analyzing isn't going bankrupt.

The solution is to assume that after some point in the future, cash flow growth stabilizes. Either cash flows don't grow anymore, or they grow at a constant rate. So when you say terminal growth rate, you are (I hope) referring to the assumed rate at which cash flows will grow beyond that magical point of stabilization. So let's say in year 6, cash flow is $100 and is assumed to grow at 2% a year. Discount rate is 10%. You can use the standard CF / (r - g) formula, i.e. $100 / (10% - 2%) = $100 / 8% = $1,250, which is the value of all future cash flows as of year 5. You can then discount that by another 5 years to get its value today.

If anyone else has thoughts on the 86, that'd be appreciated. I've got to take it in the near future and am amazed by 1) how inadequate the study book/materials are, and 2) how many mistakes there are even in the online exams.

 

Thanks! you have explained the relationship between cash flow and terminal growth rate in simple terms. While taking exam be much aware of time. 4 hours facing the computer will go very fast. every question they ask in this exam will make you think and think. time is a very big factor in this exam. good luck! i am currently looking for sponsorship for these exams.

 
mathewp984:
Hi Guys,

I recently took my series 7 and passed it. I have heard horror stories about the Series 87 - on how confusing it is and how they try to trip you. A few peers took it multiple times before passing it. I was wondering if that is the case, has anyone been in this situation before where you thought the Series 87 was hard? What books /outside resources did you use other than the ones the firm provides? Thanks in advance

Honestly I have passed my Series 7 exam recently too. Nothing is difficult. I think my success can be explained by great online guide that I used - https://testeachersonline.com/iphone_apps - very effective thing. Hope it will help you as well.
 

Guys I took the 86 not too long ago and obtained a 69%. I plan on retaking again in a month and I remember encounteringi this problem

Given:

Current Revenue = some figure ROE=15% Retention Ratio=50% Hence, growth=7.5% Current net income =$1mm

Might have provided Ke but I do not remember

What do you expect the company to be "worth" next year.

From my memory these are all the figures given. Not sure how revenue plays out here, no mention of dividend (which is weird since they love asking questions involving DDM, where Ke=Div/Stock Price+Growth rate). Answer choices were between 20mm and 40mm I believe.

Thank You

 

With the retention ratio, I assume you solve for the dividend payout ratio, you're given earnings so solve for the dividend, and then use DDM method to solve.

 

Also interested if anyone more recent felt anything different between STC S87 materials and the actual S87 exam.

 

Anybody have any additional materials or ideas for the 87? This test should be an auto-pass, but there is a complete disconnect from the STC materials as others have noted above. I emailed STC, and they sent me an additional 20 questions not included in their study materials.

 

I took the 87 over 2 years ago, but I supplemented STC with http://www.finra.org/web/groups/industry/@ip/@issues/@rar/documents/ind…. If you scroll to the last 2 pages, it has a list of the FINRA/NYSE/NASD rules that affect analysts. I went and read the raw text of each of the regulations. If nothing else, 2711 is a good place to start. (Passed on first attempt)

 

you will need to pass the series 7, and you will need to be sponsored to take the 86/87. Sorry.

You can eliminate the requirement to take the 86 if you have your CFA Level II. The fastest way to make this happen would be to take the L1 in December and the L2 in June. Tons of work, although if you are indeed out of a job it might be a good time for you to study like crazy.

The 87 is only an hour and is about laws/regulations/etc.

 

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