Series 86 & 87

mathewp984's picture
Rank: Monkey | 45

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

Comments (43)

Nov 22, 2009

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.

Mar 4, 2010

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?

Nov 22, 2009

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?

Nov 23, 2009

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.

Nov 23, 2009

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.

Dec 3, 2009

Real quick-how's the series 7? I took some practice problems online and looks quite basic..

Dec 4, 2009

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

Dec 16, 2009

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.

Dec 17, 2009

If you know the finance side of these tests and just need to learn the rules and regs, just take the practice tests on the CD a few times and you should be fine. 87 is a cake walk, pretty similar to the 63. Generally just err on the conservative side if you dont know the answer and you should be ok.

Dec 18, 2009

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.

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Dec 26, 2009

Don't you not need to take the Series 86 if you're CFA Level II certified?

Dec 27, 2009

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).

Dec 30, 2009

Yep - You dont need to take the 86 if you have your CFA Level II

Jan 4, 2010

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.

Apr 28, 2010

Series 86&87, it is worthy to have them both. Not only that you can write investment ideas, but also you can say to potential client that you are a Research Analyst. I have experience as a Stockbroker and Financial Advisor. I am now looking for brokerage firm to sponsor me for these exams. Anyone?

May 11, 2010

I recently took (and passed) the Series 86 & 87. If anyone is looking for advice on these exams feel free to message me.

May 3, 2010

Hi, i need some help understanding the relationship between the terminal growth rate and discounted cash flows?

May 3, 2010

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.

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May 13, 2010

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.

May 13, 2010

Darkxfriend, thank you! Also, i need help with the following question:

The Crustacean Company regularly issues commercial paper. The company has reached a terminal growth rate of 4%. As an analyst you have applied a terminal multiple of 12 for the steady state of cash flow expected. What would be to expect if the rate of t-bills increases by 50 basis points?

Jun 3, 2010
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.

Sep 18, 2012

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

Oct 4, 2012

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.

Jan 27, 2013

DDM

Jan 27, 2013

anyone have any advice b/w STC and the actual series 87 exam??

May 28, 2013

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.

May 29, 2013

I took the 87 over 2 years ago, but I supplemented STC with http://www.finra.org/web/groups/industry/@ip/@issues/@rar/documents/industry/p006473.pdf. 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)

May 29, 2013

you can find answers on http://www.finra.org/industry/compliance/registrat... or contact finra with a quick email or phone call.

the series 3 (and similar futures tests) are the only exams you can usually take without sponsorship.

you can bypass the 86 with L1 and L2 of the CFA in case you had those and not your 7.

May 29, 2013

you can find answers on http://www.finra.org/industry/compliance/registrat... or contact finra with a quick email or phone call.

the series 3 (and similar futures tests) are the only exams you can usually take without sponsorship.

you can bypass the 86 with L1 and L2 of the CFA in case you had those and not your 7. sorry that post duplicated.

May 29, 2013

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.

May 29, 2013

Thanks Southernbelle, as much as I had searched, I was unable to find the information.

To another day. I've signed up for the CFA in December.

May 29, 2013

Are you still able to take the Series 86/87 without being sponsored?

May 29, 2013

Off the phone with FINRA ... have to be sponsored. =/

May 29, 2013

no

May 29, 2013

Some folks would argue the 7 is the hardest, but in reality it depends on your background.

None of the tests are difficult but if you are coming from a non-finance background there's a lot of shit that needs tobe memorized for the 7.

May 29, 2013

63 is easiest. I didn't even study PERIOD and passed with the minimum score possible. In hindsight that might not be recommended.

May 29, 2013

study but don't study too much and you'll be fine.

love to fuck cats.

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May 29, 2013
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