Investment Banking Representative Qualification Exam
The Series 79 exam qualifies individuals to act as investment banking representatives. It covers the knowledge required to advise on or facilitate debt and equity offerings, mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures, and other corporate reorganizations. This exam is required for professionals engaged in investment banking activities at FINRA member firms and requires both the SIE exam and firm sponsorship.
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Practice Questions
Test your knowledge with these Series 79-style questions. Click an answer to check if you are correct.
1. In a DCF analysis, which discount rate is most commonly used to discount unlevered free cash flows?
Correct: B. WACC is used to discount unlevered (enterprise-level) free cash flows because it reflects the blended cost of both debt and equity capital. Cost of equity would be used to discount levered (equity) free cash flows. Cost of debt and risk-free rate are components of the calculation, not the discount rate itself.
2. Under the Williams Act, a tender offer must remain open for a minimum of:
Correct: B. The Williams Act requires that a tender offer remain open for a minimum of 20 business days. If the offeror changes the price or percentage of shares sought, the offer must remain open for an additional 10 business days from the date of the change.
3. Precedent transaction multiples are typically higher than comparable company trading multiples because they include:
Correct: B. Precedent transactions involve acquisitions where the buyer pays a control premium -- typically 20-40% above the trading price -- for the right to control the target company. Trading comps reflect minority interest values without a control premium.
4. In a firm commitment underwriting, who bears the risk of unsold shares?
Correct: B. In a firm commitment underwriting, the underwriter purchases the entire offering from the issuer and assumes the risk of reselling it to investors. If shares go unsold, the underwriter absorbs the loss, which is why the underwriting spread compensates for this risk.
5. An acquirer's pro forma EPS is lower than its standalone EPS after a proposed acquisition. The deal is considered:
Correct: B. A deal is dilutive when the combined pro forma EPS is lower than the acquirer's standalone EPS. This can occur when the acquisition price is high relative to the target's earnings, when the cost of financing exceeds the target's earnings contribution, or when significant share issuance is involved.
Related Exams
These exams are commonly pursued alongside or after the Series 79.
Securities Industry Essentials
The prerequisite for the Series 79. Covers fundamental concepts of securities products, markets, regulatory agencies, and prohibited practices.
Uniform Securities Agent State Law
Often required alongside the Series 79 for state registration. Covers state securities regulations, registration requirements, and ethical practices.