Series-79 Exam: Your Guide to Becoming an Investment Banking Representative
The Series-79 exam, administered by the Financial Industry Regulatory Authority (FINRA), is an essential step for individuals aspiring to work in investment banking. The Series-79 exam, also known as the Investment Banking Representative Qualification Exam, is designed to assess a candidate’s knowledge, skills, and ability to perform key tasks of an investment banker. Passing this exam earns candidates the FINRA Representative-level certification, which signifies that they are qualified to assist in a range of investment banking services, including mergers, acquisitions, and securities offerings. Here, we’ll dive into everything you need to know about the Series-79 exam and how to successfully prepare for it.
What is the Series-79 Exam?
The Series-79 exam assesses candidates on the knowledge required to perform functions associated with an investment banking representative. This exam tests the understanding of critical industry practices and regulatory requirements for the sale of corporate securities, public offerings, and other activities essential to investment banking roles. Specifically, it focuses on mergers and acquisitions, public offerings, financial restructuring, and other corporate finance transactions. Professionals who pass this exam are qualified to engage in investment banking activities such as advising clients on securities offerings, handling merger processes, and analyzing financial situations for corporate clients.
Series-79 Exam Format and Structure
The Series-79 exam is a multiple-choice test with 75 questions, all of which must be completed within 150 minutes (2 hours and 30 minutes). The exam has a passing score of 73%, meaning candidates need to answer at least 55 questions correctly to pass. The questions are designed to evaluate understanding and application of investment banking knowledge in practical scenarios.
The test is divided into three key sections:
- Collection, Analysis, and Evaluation of Data – This section assesses the ability to analyze financial statements, interpret market data, and understand the client’s needs for financing and strategic planning.
- Underwriting/New Financing Transactions, Types of Offerings, and Registration of Securities – In this part, candidates are tested on their understanding of the processes for initial public offerings (IPOs), private placements, and underwriting functions.
- Mergers and Acquisitions, Tender Offers, and Financial Restructuring Transactions – This final section covers the legal and financial considerations in M&A, as well as how to manage transaction risks and regulatory requirements.
Eligibility and Requirements for Series-79
To be eligible for the Series-79 exam, candidates must be sponsored by a FINRA member firm. This requirement ensures that the individual is already employed or associated with a registered organization that has a clear understanding of FINRA’s policies and procedures. Sponsorship is a prerequisite before scheduling the Series-79 exam, and once sponsorship is secured, candidates can register through the FINRA Central Registration Depository (CRD) system.
Candidates also need to pass the Securities Industry Essentials (SIE) exam. The SIE exam is a foundational exam that tests on basic securities industry knowledge, including regulatory agencies and their functions, as well as common product offerings. Passing the SIE exam and then the Series-79 fulfills the licensing requirements for an Investment Banking Representative.
Core Topics Covered in the Series-79 Exam
The Series-79 exam covers a range of topics that are crucial to the investment banking profession. Here is an overview of the primary topics tested:
- Financial Analysis and Corporate Valuation: Candidates are tested on their knowledge of analyzing financial statements, understanding valuation methods, and identifying financial risks associated with corporate transactions.
- Securities Offerings: Understanding various types of securities offerings, such as debt and equity offerings, is fundamental to investment banking. Questions assess familiarity with public and private offerings, underwriting processes, registration of securities, and regulatory filing requirements.
- Mergers and Acquisitions (M&A): The exam includes topics on the strategies behind mergers, acquisitions, and divestitures, along with an emphasis on financial and legal due diligence. Candidates should understand different transaction structures, M&A process steps, and regulatory implications.
- Corporate Finance Transactions and Risk Management: The Series-79 evaluates knowledge of corporate restructuring, risk assessment, and financial strategies that are part of investment banking advisory services.
Preparing for the Series-79 Exam
Proper preparation is essential for success in the Series-79 exam. The test focuses heavily on applied knowledge rather than basic definitions, so candidates should be prepared for questions that simulate real-world scenarios in investment banking. Here are some effective strategies for preparing:
- Study Guides and FINRA Materials: Use the official FINRA Series-79 content outline as a starting point, as it details the knowledge required for each exam section. There are also several Series-79 exam study guides available from FINRA and third-party providers.
- Practice Exams: Taking practice exams is a key part of preparation. Practice exams simulate the test environment, allowing candidates to assess their knowledge level, timing, and comfort with the test format.
- Focused Study on Key Concepts: Since the exam covers complex topics such as valuation methods, deal structuring, and regulatory requirements, it’s important to spend extra time studying these areas. Topics like due diligence processes, SEC regulations, and underwriting functions are particularly important.
- Investment Banking Training Programs: Many training programs offer specific courses for the Series-79 exam. These programs provide in-depth information and help you learn from professionals experienced in the field.
Career Opportunities After Passing the Series-79
Passing the Series-79 exam opens doors to a variety of career opportunities in the investment banking sector. With the FINRA Representative-level certification, professionals can pursue roles such as Investment Banking Analyst, Corporate Finance Advisor, or Mergers and Acquisitions Specialist. These roles involve advising clients on strategic financial decisions, facilitating mergers and acquisitions, and analyzing financial health for corporate clients. Many firms require employees in these roles to hold the Series-79 qualification due to the complex nature of their responsibilities and the need for a thorough understanding of the regulatory landscape.
FINRA offers a wealth of resources for those preparing for the Series-79 exam, giving candidates the tools they need to excel. Dedicating time to a deep understanding of the material, along with the strategic use of Series-79 exam dumps, can significantly boost your chances of passing on the first try.
Series-79 Sample Exam Questions and Answers
| QUESTION: 1 |
| What is the purpose of preparing, negotiating, and finalizing the engagement letter? Option A: All of the above Option B: To establish the terms of the relationship between the investment bank and the seller Option C: To outline the scope of services to be provided Option D: To determine the fees to be charged |
| Correct Answer: A |
| Explanation/Reference: The engagement letter sets forth the terms of the relationship. |
| QUESTION: 2 |
| What are the tasks associated with private placements that are unique to private placements? Option A: Preparation of private offering documents Option B: Procurement of non-binding commitments Option C: Determining eligibility of interested investors Option D: All of the above |
| Correct Answer: D |
| Explanation/Reference: Private placements have unique tasks. |
| QUESTION: 3 |
| What is the balance sheet? Option A: A statement of a company’s financial position Option B: A statement of a company’s cash flows Option C: A statement of a company’s income and expenses Option D: A statement of a company’s assets and liabilities |
| Correct Answer: A |
| Explanation/Reference: The balance sheet shows financial position. |
| QUESTION: 4 |
| What are NYSE and Nasdaq listing requirements? Option A: Requirements for companies seeking to go public Option B: All of the above Option C: Requirements for companies seeking to remain listed Option D: Rules governing the listing of securities on these exchanges |
| Correct Answer: B |
| Explanation/Reference: Listing requirements apply to both NYSE and Nasdaq. |
| QUESTION: 5 |
| What is the purpose of a proxy statement or prospectus in an M&A transaction? Option A: To solicit shareholder approval Option B: To provide information to shareholders Option C: To comply with regulatory requirements Option D: All of the above |
| Correct Answer: D |
| Explanation/Reference: Proxy statements or prospectuses serve multiple purposes. |
| QUESTION: 6 |
| What are key factors to consider when evaluating potential buyers? Option A: All of the above Option B: Ability to pay Option C: Potential synergies Option D: Strength of currency |
| Correct Answer: A |