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The Preliminary Oral Exam is the last exam in your way to a Ph.D. degree before the actual thesis defense itself. At this stage, you have a research adviser who will guide you to completion of the Ph.D. degree.
Only after you pass the oral exam, you can register for thesis credits (you need 24 of them before you complete your degree). And after you finish taking thesis credits (you need at least two semesters to do so), you will reach “ABD status” (All But Dissertation).
You are expected to write a paper for the oral exam, and give it to the committee members at least two weeks before the exam (some faculty members want more than two weeks to be able to give the paper due attention. Check with them well in advance about this). During the exam, you will talk about the paper for up to 20 minutes. The paper should be written concisely. The recommended length is about 10-20 pages (double spaced). A small difference from the recommended length is acceptable, but the length should not be more than 30 pages (double spaced).
The paper should deal with a research topic that you may work on for your thesis or part of it to demonstrate that you are “ready” to start research. (If you end up doing something else for your thesis, that's OK.) The paper should therefore demonstrate that you understand why it is meaningful to do such research (why it should be of interest to people or at the least other physicists) and why it is possible (probable or likely?) to find reasonable results. To this end, you should present background information about the proposed research, which may include a theoretical basis (if it's experimental research); related research which has been done and how it is related to the proposed research; what you will do differently from previous work to improve on it, if such research exists; some rough description of your proposed research; and expected results. The paper does not have to have any results from your research since it is meant to be an opportunity for you to demonstrate your aptitude to START doing research. However, some professors, particularly those in theory, like you to have done some easy research to see how well you can approach theoretical problems, and may ask you to include some of the work in the oral exam.
The total duration of the exam should not exceed 90 minutes. This time includes your initial presentation of the paper. You should prepare your presentation to be 20 minutes long so that you will not be rushed when you are asked questions later. This phase is followed by an question and answer period about your presentation, and about the paper that you submitted. This is followed by a third phase, the exam phase. Here you will be asked general questions about Physics, although directly related to your chosen area of research.