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Open Exam Prep · August 26 · 4 min

Series 7 Exam Prep 80, Diversification, Correlation, and Asset Allocation

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: - Why owning many stocks in the same sector isn't true diversification and how the Series 7 tests this concept. - How to use correlation, from -1 to +1, to select assets that maximize diversification benefits. - The critical distinction between unsystematic (diversifiable) risk and systematic (non-diversifiable) market risk, a frequent exam topic. - The difference between long-term Strategic Asset Allocation (passive) and short-term Tactical Asset Allocation (active). - A simple mnemonic to remember the difference: Strategic is Static, Tactical is Transactional. 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

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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:
- Why owning many stocks in the same sector isn't true diversification and how the Series 7 tests this concept.
- How to use correlation, from -1 to +1, to select assets that maximize diversification benefits.
- The critical distinction between unsystematic (diversifiable) risk and systematic (non-diversifiable) market risk, a frequent exam topic.
- The difference between long-term Strategic Asset Allocation (passive) and short-term Tactical Asset Allocation (active).
- A simple mnemonic to remember the difference: Strategic is Static, Tactical is Transactional.

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

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