FINRA Series 79 Practice Test & Mock Exam

Series 79 rewards candidates who can move from transaction facts to analysis, process, documentation, and the right investment-banking next step without losing structure. If you are searching for Series 79 sample questions, a practice test, mock exam, or simulator, this is the main Securities Prep page to start on web and continue on iOS or Android with the same account. This page includes 24 sample questions with detailed explanations so you can try the exam style before opening the full app question bank.

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What this Series 79 practice page gives you

• a direct route into the Securities Prep simulator for Series 79
• targeted practice around underwriting, new financing, M&A, restructurings, valuation, and documentation workflow
• detailed explanations that show why the strongest banking response is the most defensible
• a clear free-preview path before you subscribe
• the same subscription across web and mobile

Series 79 exam snapshot

• Provider: FINRA
• Exam: Investment Banking Representative Qualification Exam
• Practice reference: 75 practice questions in 150 minutes
• Registration context: generally paired with the SIE

Topic coverage for Series 79 practice

• Deal analysis: data collection, financial analysis, valuation, and underwriting or financing work
• Transaction process: M&A, tender offers, restructurings, and compliant documentation steps
• Representative judgment: choosing the right next action as the deal facts evolve

How Series 79 differs from similar routes

How to use the Series 79 simulator efficiently

1. Start with underwriting and valuation drills so the banking workflow becomes easier to recognize.
2. Review every miss until you can explain which deal fact, analysis point, or process step changed the answer.
3. Move into mixed sets once you can switch between financing, M&A, and restructuring scenarios without hesitation.
4. Finish with timed runs so the 150-minute pace feels controlled.

Free preview vs premium

• Free preview: 24 public sample questions on this page plus the web app entry so you can validate the question style and explanation depth.
• Premium: the full Series 79 practice bank, focused drills, mixed sets, timed mock exams, detailed explanations, and progress tracking across web and mobile.

Free samples and full bank

• Live now: this exact practice route is available in Securities Prep on web, iOS, and Android.
• On-page sample set: this page includes 24 public sample questions from the current practice coverage.
• Full app: open the Securities Prep web app or mobile app for broader timed coverage.

Good next pages after Series 79

• Series 82 if you are comparing classic investment-banking work against private-offerings activity
• Series 86 if you want the research-analysis route beside deal execution work
• Series 24 if the target shifts from representative banking work into principal supervision
• FINRA if you want the full specialist and principal route map first

Free review resources

Use these free SecuritiesMastery.com resources for concept review, then return to this page when you are ready to practice in Securities Prep.

• Series 79 Cheat Sheet
• Series 79 Study Guide

Focused sample questions

Use these focused Series 79 sample-question pages when you want to isolate one official topic area before returning to the mixed simulator.

• Data Analysis
• Underwriting and Financing
• Mergers and Acquisitions
• Free Series 79 Full-Length Practice Exam

24 Series 79 sample questions with detailed explanations

These sample questions cover multiple blueprint areas for Series 79. Use them to check your readiness here, then move into the full Securities Prep question bank for broader timed coverage.

Question 1

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A strategic buyer and a public target have signed an all-cash merger agreement. The target’s board wants to hit near-term revenue goals before the expected closing and is considering signing a 5-year exclusive customer contract that is not typical for the business.

Key terms (excerpt):

• Buyer financing condition: none
• Closing conditions: HSR clearance; reps accurate at closing (bring-down); covenants performed in all material respects
• Interim operating covenant: target must operate in the ordinary course and not enter material contracts outside the ordinary course without buyer consent

As the banker running the signing-to-closing workplan, what is the primary risk/tradeoff the parties should focus on?

• A. Greater disclosure risk because reps and warranties become public
• B. Reduced closing certainty if the contract breaches the interim covenant
• C. Greater timing risk because HSR filings must be redone
• D. Higher post-close integration risk from changing customer terms

Best answer: B

Explanation: Between signing and closing, the most deal-critical execution risk is satisfying conditions precedent, many of which are tied to interim covenants. Here, entering an unusual long-term exclusive contract without buyer consent could breach the ordinary-course covenant and cause the covenant-performance closing condition (and potentially the bring-down framework) to fail, reducing timing and closing certainty.

Question 2

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

You are the lead sell-side M&A advisor to a privately held U.S. manufacturer. The seller’s board wants a broad auction (strategic and sponsor buyers) but is concerned about (i) execution risk from underfunded bidders and (ii) conflicts if your firm’s leveraged finance desk provides stapled financing.

Which action best aligns with durable investment-banking standards while evaluating and pursuing potential buyers?

• A. Give full VDR access to all NDA signers, then assess financing later
• B. Offer stapled financing only to the highest-indication sponsor to speed execution
• C. Limit VDR access to strategic buyers to reduce confidentiality risk
• D. Get board consent, disclose stapled-financing role to all bidders, and wall-cross teams

Best answer: D

Explanation: When a sell-side advisor may provide stapled financing, the core standard is transparent conflict management plus a fair, well-documented process. Board-informed consent and clear disclosure to bidders protect process integrity, while information barriers help prevent misuse of confidential information between M&A and financing teams. This approach also supports credible buyer evaluation by keeping outreach and access decisions defensible if challenged later.

Question 3

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A private U.S. software issuer is raising $150 million in a Rule 506(b) private placement to fund an acquisition. The board wants to sign the acquisition agreement in 10 days and announce that the financing is “fully committed,” but the issuer also wants to keep the process highly confidential (no broad outreach).

The placement agent has received $120 million of “soft-circled” indications of interest from a small group of accredited investors under NDAs, but the PPM and definitive subscription agreements have not yet been delivered/executed.

Which risk/limitation is most important in deciding whether the issuer can credibly treat the financing as committed at signing?

• A. General solicitation is required to complete a Rule 506(b) private placement quickly
• B. Soft-circled IOIs can be withdrawn until subscriptions are executed and conditions satisfied
• C. Regulation M restricts stabilization activity before the private placement prices
• D. The issuer must publicly file an SEC registration statement before taking orders

Best answer: B

Explanation: In a private placement, “soft-circled” indications are non-binding and can change or disappear before execution of definitive subscription documents and satisfaction of closing conditions. Because the board’s objective is signing-date financing certainty, the key tradeoff is speed/confidentiality versus true commitment that only comes with signed subscriptions (and, practically, funded proceeds).

Question 4

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A public company is seeking shareholder approval for a stock-for-stock merger and will file a combined proxy statement/prospectus (Form S-4). The target board received your bank’s written fairness opinion, and your fee is partially contingent on closing; the bank also provided prior financing to the buyer within the last 12 months. The client wants the disclosure to be concise and does not want to disclose your full valuation models.

Which recommendation best satisfies the required fairness-opinion disclosure while addressing these constraints?

• A. Include a summary of material valuation analyses and key assumptions, and disclose fees and material relationships/conflicts
• B. Attach the signed fairness opinion letter as an exhibit and omit any narrative summary of analyses and relationships
• C. Disclose only that the board received a fairness opinion and that it was favorable, to avoid revealing analysis details
• D. Provide the complete DCF model and all comparable-company inputs, but omit fee and relationship details

Best answer: A

Explanation: When a fairness opinion is referenced to support a board’s recommendation in a merger proxy/prospectus, shareholders must be given a high-level but meaningful summary of the material financial analyses performed. The disclosure also needs to address compensation and material relationships that could create conflicts, such as contingent fees and recent services to a party. This can be done without providing full underlying models or workpapers.

Question 5

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A U.S. private operating company wants to raise growth capital from the general public without doing a full IPO. Management wants the securities to be freely tradable at issuance and expects the deal size to be about $40 million. The deal team suggests using Regulation A as a conditional “small issues” exemption.

As the underwriter, what is the best next step to execute this approach in the proper sequence?

• A. File a Form S-1 registration statement for a traditional IPO
• B. Prepare and file a Form 1-A for SEC qualification
• C. Begin accepting investor funds and close once marketing is complete
• D. Limit sales to QIBs under Rule 144A to avoid SEC review

Best answer: B

Explanation: Regulation A is designed to let smaller issuers raise capital from the public using a streamlined, conditional exemption rather than full Securities Act registration. The key control point is that the issuer must file an offering statement (Form 1-A) and obtain SEC “qualification” before making sales under Reg A.

Question 6

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A public buyer and a private seller sign a definitive merger agreement. The agreement includes a closing condition that the seller must obtain “required third-party consents for material contracts,” and the seller covenants to use commercially reasonable efforts to do so. The banker’s closing checklist mistakenly omits a change-of-control consent required under the seller’s largest customer contract.

One week before the targeted closing date, the customer refuses to grant consent unless pricing is renegotiated. The buyer will not waive the consent condition, and the agreement’s outside date is still 60 days away.

What is the most likely outcome?

• A. The merger must close on schedule, and the consent can be obtained post-closing
• B. Closing will be delayed unless the consent is obtained or the buyer waives the condition
• C. The buyer must re-run valuation and obtain a new fairness opinion before it can extend the closing date
• D. The seller must immediately pay a break-up fee solely because the consent was not obtained by the targeted closing date

Best answer: B

Explanation: Because the customer consent is an explicit closing condition and the buyer is not waiving it, the buyer typically is not required to close until that condition is satisfied. A missed dependency on the closing checklist most often translates into a closing delay and heightened execution risk. With an outside date still open, the parties usually have time to cure rather than close anyway.

Question 7

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

You are the lead banker on a sell-side process for a privately held U.S. software company. A third-party quality of earnings (QoE) report identified a revenue-recognition issue that reduces LTM EBITDA by $5 million versus the company’s original internal schedule. The teaser will be broadly distributed (no NDA), and the CIM will be distributed only to parties that sign an NDA and access the virtual data room.

Which action is INCORRECT when finalizing the teaser and CIM?

• A. If a non-GAAP metric is shown, providing a clear reconciliation to GAAP financial statements and consistent definitions across the teaser and CIM
• B. Running a consistency check so KPIs, customer metrics, and growth rates in the CIM match management’s support and third-party diligence outputs
• C. Keeping the original LTM EBITDA in the CIM and addressing the QoE adjustment only if a bidder asks
• D. Updating the CIM financials to reflect the QoE-adjusted LTM EBITDA and tying the figures to support in the data room

Best answer: C

Explanation: Sell-side teasers and CIMs must be consistent with diligence and should not contain materially misleading or outdated information. If diligence identifies a material EBITDA adjustment, the banker should update the CIM (and any summarized figures) or clearly disclose and reconcile the difference. Waiting to correct the information only if asked undermines disclosure discipline and can damage credibility in the process.

Question 8

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

In a conflicted M&A transaction (for example, a controller-led squeeze-out or management buyout), which statement best describes the role of a special committee and independent advisers in supporting fiduciary decision-making?

• A. They allow disinterested directors, advised by independent legal/financial advisers, to evaluate alternatives and negotiate at arm’s length to address conflicts and support an informed board decision
• B. They are formed primarily to solicit shareholder votes and run the proxy solicitation campaign
• C. They ensure the transaction cannot be challenged, because the fairness opinion conclusively proves the price is fair
• D. They replace the need for full board approval as long as the committee obtains a fairness opinion

Best answer: A

Explanation: In conflicted deals, a special committee is a governance tool that helps the board manage conflicts by delegating evaluation and negotiation to disinterested directors. Using independent legal and financial advisers (often including a fairness opinion provider) supports an informed process, helps demonstrate arm’s-length dealing, and strengthens the fiduciary record.

Question 9

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A public issuer is negotiating a prepetition restructuring support agreement with a small group of its largest noteholders. To obtain commitments, management wants to share a 13-week cash flow and updated projections that are not yet public and would likely move the market. Management’s top priority is keeping the discussions confidential until a full deal is signed because supplier confidence is fragile.

Which communication approach best fits that priority?

• A. Provide the projections to noteholders without NDAs because Reg FD does not apply to debt holders
• B. Wall-cross the noteholders under NDAs, treat them as private-side, and restrict trading until cleansing
• C. Post the projections publicly (e.g., 8-K/investor deck) before outreach so recipients can trade freely
• D. Rely on the bank’s internal information barriers so noteholders can receive MNPI and continue trading

Best answer: B

Explanation: Because the issuer wants confidentiality while sharing market-moving, nonpublic forecasts, it should wall-cross the noteholders under NDAs and apply MNPI controls. That approach allows targeted sharing without public dissemination and aligns with typical distressed “private-side” creditor work. Trading should be restricted until the issuer makes an appropriate cleansing disclosure.

Question 10

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

An issuer is planning a Regulation A offering and wants to minimize separate state “blue sky” merit review and registration/qualification requirements for the securities being sold in multiple states. Which Regulation A feature/function best matches this goal?

• A. Conduct the offering under Regulation D Rule 504 to obtain federal preemption of state registration/qualification
• B. Conduct the offering as Regulation A Tier 1 to avoid state blue sky review
• C. Register the offering on Form S-1 to rely on an exemption from state blue sky laws
• D. Conduct the offering as Regulation A Tier 2 to obtain federal preemption of state registration/qualification

Best answer: D

Explanation: Regulation A Tier 2 is designed to reduce multi-state blue sky burdens by generally preempting state registration and qualification requirements for the securities sold. States may still require notice filings and fees and can bring anti-fraud actions, but they typically cannot require separate substantive registration for Tier 2.

Question 11

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

You are supporting a fairness opinion for the target’s board. Based on the exhibit, which interpretation is best supported?

Exhibit: Offer and financial snapshot (USD)

• A. 23% premium; implied EV/EBITDA about 9.4x
• B. 30% premium; implied P/E about 9.4x
• C. 30% premium; implied EV/EBITDA about 7.2x
• D. 30% premium; implied EV/EBITDA about 9.4x

Best answer: D

Explanation: Premium is measured versus the unaffected price: \((26.00-20.00)/20.00=30\%\). The implied enterprise value equals equity value plus net debt, and dividing that EV by LTM EBITDA produces an implied EV/EBITDA of about 9.4x.

Question 12

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

DeltaCo (NYSE-listed) is completing an out-of-court restructuring and acquiring private NewHoldCo. DeltaCo will issue common stock to NewHoldCo owners and to DeltaCo noteholders.

Assume NYSE rules require a shareholder vote if new shares issued exceed 20% of DeltaCo’s pre-transaction shares outstanding, and DeltaCo plans to register the shares issued to NewHoldCo owners.

Exhibit (shares):

• Pre-transaction shares outstanding: 40,000,000
• New shares to NewHoldCo owners: 7,000,000
• New shares to noteholders: 2,000,000

Which SEC filing/document package would most likely be used to both register the transaction securities and solicit the required shareholder approval?

• A. Form S-4 with a combined proxy statement/prospectus
• B. Form S-1 registration statement only
• C. Form 8-K filing as the primary disclosure document
• D. Schedule TO tender offer statement

Best answer: A

Explanation: DeltaCo is issuing registered shares as consideration in a business combination and the total issuance is large enough to require a shareholder vote. In that situation, the standard approach is a Form S-4 registration statement that also serves as (or includes) the proxy statement/prospectus, with Regulation M-A style transaction disclosures.

Question 13

Topic: Function 1 — Collection, Analysis and Evaluation of Data

Your bank advises a strategic buyer acquiring a private software company for a headline price of $500 million. The buyer wants to sign within 3 weeks and keep the headline price intact; the seller is insisting on a 10% indemnity cap and 12-month survival for most reps.

Diligence shows (1) the target’s largest customer (28% of revenue) requires change-of-control consent and has indicated it may rebid the contract at renewal in 4 months, and (2) a former contractor is asserting ownership of key code and is threatening litigation.

Which recommendation best addresses the diligence findings while meeting the buyer’s constraints?

• A. Rely primarily on reps and warranties insurance and keep the agreement terms unchanged
• B. Re-trade the purchase price downward to reflect the customer and IP risks
• C. Seek a change-of-control consent closing condition and a carve-out special indemnity backed by an escrow/holdback for the IP claim
• D. Sign now without conditions and plan to invoke an MAE if the customer does not consent or renews on worse terms

Best answer: C

Explanation: The diligence findings point to two deal-critical risks: loss of a highly concentrated customer due to a required consent and a potentially value-imparing IP ownership dispute. The best negotiation posture is to convert these into specific protections that do not require cutting the headline price or broadly reopening seller-friendly indemnity terms. A targeted closing condition plus a carve-out indemnity/escrow addresses both risks within the stated constraints.

Question 14

Topic: Function 1 — Collection, Analysis and Evaluation of Data

You are on the underwriting team for an IPO. The draft registration statement discloses the following for FY 2024 (USD): total debt $360 million, cash $20 million, Adjusted EBITDA $80 million, and it states “net leverage is 4.0x.”

Based on these figures, net leverage is approximately \((360-20)/80 = 4.25x\). Which action best supports liability-risk management for the underwriters by evidencing a reasonable investigation process?

• A. Escalate the discrepancy, request a reconciliation/support, and document the inquiry and resolution
• B. Change the disclosed leverage to 4.25x in the draft without consulting the issuer or counsel
• C. Assume the issuer rounded and proceed without further follow-up
• D. Rely on the auditor’s comfort letter as a substitute for investigating the disclosure inconsistency

Best answer: A

Explanation: A quick leverage check surfaced an internal inconsistency in the draft disclosure. A core purpose of underwriter due diligence is to identify, investigate, and resolve such issues, creating a record that the syndicate conducted a reasonable investigation. Escalating the discrepancy, obtaining support/reconciliation, and documenting the process best supports a due diligence defense and reduces liability risk.

Question 15

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A public target’s special committee has asked your bank to deliver a fairness opinion on a proposed sale for a mix of cash and acquirer stock at a fixed exchange ratio. Two constraints: (1) the analysis must support fairness to the target’s shareholders from a financial point of view (not the acquirer’s deal economics), and (2) management’s projections include an uncommitted cost-savings plan and a one-time litigation settlement gain booked in the first forecast year. The committee also wants comfort that the conclusion is not overly dependent on the acquirer’s current stock price.

Which action is the single best recommendation to support a defensible fairness opinion conclusion under these constraints?

• A. Focus the analysis on accretion/dilution to the acquirer and pro forma EPS impacts to justify the exchange ratio
• B. Normalize projections for non-recurring/uncommitted items, run a standalone DCF with sensitivities, and triangulate to trading/transaction comps plus implied offer multiples across an acquirer stock-price range
• C. Base the conclusion primarily on the deal premium to the target’s unaffected stock price and recent 52-week trading range
• D. Include the acquirer’s expected synergies in the target’s cash flow forecast to reflect the full value of the transaction

Best answer: B

Explanation: A fairness opinion is supported by valuation analyses that estimate the target’s value on a standalone basis and corroborate the result using market-based references. Here, projections must be adjusted to remove one-time items and reflect only supportable assumptions, then tested with sensitivities. Because consideration includes stock at a fixed ratio, the implied value should be evaluated over a reasonable range of acquirer share prices to avoid a conclusion driven by a single spot price.

Question 16

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A Colorado-incorporated issuer with its principal place of business and operations in Colorado plans a common stock private raise relying on the intrastate offering exemption (Rule 147/147A). The issuer posts offering materials on its public website with no geofencing or residency screening and accepts a signed subscription from a purchaser who is a legal resident of New York.

What is the most likely outcome?

• A. The intrastate exemption is likely unavailable for the offering
• B. The exemption is preserved if proceeds are used in Colorado
• C. Only the New York sale is void; the rest remain exempt
• D. Adding a six-month resale restriction cures the exemption issue

Best answer: A

Explanation: The intrastate exemption’s purpose is to allow a local capital raise without SEC registration when the entire offering is kept within one state. Here, the issuer made an unrestricted public internet offer and accepted a sale to a non-Colorado resident, which is inconsistent with the core intrastate condition that offers and sales be limited to in-state residents. The likely consequence is loss of the exemption and Section 5 exposure for an unregistered offering.

Question 17

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A U.S. public software issuer is launching a marketed follow-on offering. Management has time for only 8 hours of investor meetings over 2 days, and the CFO’s primary goal is to increase stable, long-only active ownership to help reduce post-deal volatility. Because the stock currently has elevated short interest, the issuer also wants to de-emphasize investors with a history of short-term, event-driven trading in the sector.

Exhibit: Ownership/targeting snapshot (high level)

Which road show targeting plan is the single best recommendation to meet all of the issuer’s constraints?

• A. Schedule most meetings with Orion’s largest current holders, including passive/index funds, to reinforce support
• B. Replace most one-on-ones with a broad group meeting/webcast open to all accounts to maximize reach
• C. Allocate most meetings to event-driven hedge funds to rapidly oversubscribe the book and tighten pricing
• D. Prioritize one-on-ones with long-only active funds that own peers but not Orion, plus top existing long-only Orion holders

Best answer: D

Explanation: Given limited management bandwidth, the road show should be concentrated on investor segments most likely to add durable, incremental demand. Ownership and peer-holder analysis points to sector-focused long-only active funds that already follow the space but are underweight/not holders of the issuer. De-emphasizing event-driven accounts aligns with the issuer’s desire to avoid short-term trading amid elevated short interest.

Question 18

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

An issuer is raising $75 million of senior notes in a Regulation D private placement relying on Rule 506(b). The placement agent’s policy (stated in the offering materials) is to accept orders only from accredited investors.

Exhibit: Pre-screened indications of interest

Based on the exhibit and baseline Regulation D concepts, which order is eligible to be accepted under the agent’s stated policy?

• A. Blue Harbor SPV LLC
• B. Dana L. (individual)
• C. Oak Tree Revocable Trust
• D. RiverCity Bank, N.A.

Best answer: D

Explanation: For a Rule 506(b) private placement, the placement agent can screen investors for accredited status as an initial eligibility check. Under the agent’s policy, only accredited investors’ orders can be accepted. A bank qualifies as an accredited investor based on its regulated institutional status.

Question 19

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

Your bank is preparing a fairness opinion for a special committee evaluating a controlling stockholder’s cash-out merger. Constraints: (1) the bank will receive a success fee at closing; (2) management delivered updated projections yesterday and the committee wants the opinion to rely on the final projections used in negotiations; (3) outside counsel wants a short letter, with detailed analyses kept in supporting records rather than embedded in the letter. Which action is the single best recommendation to satisfy these constraints and create a defensible fairness-opinion record?

• A. Attach the full valuation model output and all trading comps screens as appendices to the letter to maximize transparency
• B. Keep success-fee and prior engagement details only in internal compliance files, since the letter is addressed solely to the committee
• C. Update the analyses for the final projections, disclose material relationships/fees in the letter, and retain detailed workpapers showing data sources, methods, assumptions, and sensitivity support
• D. Issue the opinion using the earlier projections to meet timing, and note that projections are “not reliable” to reduce liability

Best answer: C

Explanation: A fairness opinion letter should be concise but must still disclose material conflicts (including contingent fees) and clearly describe scope, sources, and key assumptions. Because the committee wants reliance on the final projections, the bank should refresh analyses to those projections. The defensible record is created through complete supporting workpapers that allow the opinion’s basis to be reconstructed.

Question 20

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A U.S. issuer is planning a firm-commitment IPO. Atlas Securities has already been selected as lead-left/bookrunner.

The issuer is evaluating how to include Delta Capital:

• Structure 1: Delta will sign the underwriting agreement for 8% of the deal, be listed on the prospectus cover as a co-manager, and participate in syndicate management calls and roadshow coordination.
• Structure 2: Delta will not sign the underwriting agreement, will not be listed on the prospectus cover, and will only place shares with its clients for a selling concession.

Under Structure 1, Delta is best described as a(n):

• A. Lead-left/bookrunner
• B. Selling concession-only finder’s agent
• C. Co-manager
• D. Selling group member

Best answer: C

Explanation: A co-manager is part of the underwriting syndicate and also part of the managing group, typically listed on the prospectus cover and involved in coordination alongside the lead-left/bookrunner. Structure 1 describes underwriting participation plus management-group involvement. That combination distinguishes a co-manager from a non-managing syndicate member or a selling group member.

Question 21

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A buyer has signed a definitive agreement to acquire a NYSE-listed Delaware target in an all-cash transaction. The buyer’s board has directed the deal team to minimize the time from signing to closing, and HSR clearance is expected quickly.

Deal A: One-step merger; target will solicit shareholder approval via a proxy statement and hold a special meeting.

Deal B: Two-step acquisition; buyer will commence a cash tender offer promptly after signing, followed by a back-end merger under DGCL Section 251(h) (back-end merger can be completed without a shareholder vote once a majority of shares are tendered).

Which deal structure best fits the board’s objective?

• A. Deal B, because it can avoid a shareholder meeting after a successful tender offer
• B. Deal B, because the back-end merger can be completed without any minimum tender condition
• C. Deal A, because proxy solicitations generally close faster than tender offers
• D. Deal A, because an all-cash deal eliminates the need for any shareholder vote

Best answer: A

Explanation: Deal B is designed to shorten the signing-to-closing path by shifting approval mechanics from a scheduled shareholder meeting to a tender offer. With DGCL 251(h) available, once a majority of shares are tendered the buyer can complete the back-end merger without a separate shareholder vote, reducing execution time and coordination steps.

Question 22

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

A U.S. issuer is doing a registered, overnight follow-on off its shelf; the underwriting agreement is signed and the deal is expected to price tonight with closing next business day (T+1). This morning, management tells the lead underwriter it will sign a material acquisition agreement and must publicly announce it tomorrow morning due to a leak. The underwriting agreement includes (i) a covenant to promptly notify underwriters of material developments, (ii) a bring-down of issuer representations at closing, and (iii) a closing condition requiring an updated comfort letter. What is the single best action for the lead underwriter?

• A. Move the sale to a Rule 144A placement to avoid updates
• B. Proceed to closing and rely on issuer indemnification
• C. Require updated disclosure and updated bring-down deliverables before closing
• D. Increase the overallotment option to offset added risk

Best answer: C

Explanation: Because a material acquisition will be announced before settlement, the underwriter must treat it as a development that can affect disclosure and the accuracy of issuer representations at closing. The best action is to ensure the public offering disclosure is updated and that closing conditions (including comfort letter and bring-down items) can be satisfied before delivering shares and funds.

Question 23

Topic: Function 2 — Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities

Your firm is a co-manager on a highly oversubscribed IPO for a pre-revenue technology issuer. The syndicate desk is finalizing allocations and receives the following requests from sales:

• Allocate shares to a 72-year-old retail client whose account profile is “income/capital preservation,” because the deal is “hot.”
• Allocate shares to the issuer’s director’s family account as a relationship courtesy.
• Accept a hedge fund’s order only if the fund agrees to buy additional shares in the aftermarket to “support the price.”
• Allocate shares to a growth-oriented client whose account documentation reflects a speculative objective, after ensuring the final prospectus is delivered and the allocation rationale is recorded.

Which action best aligns with customer protection and suitability standards in offering distribution practices?

• A. Accept the hedge fund’s conditional order to help reduce aftermarket volatility
• B. Allocate to the 72-year-old client because IPO allocations are exempt from suitability review
• C. Allocate to the issuer director’s family account to strengthen the issuer relationship
• D. Allocate to the growth-oriented client, with prospectus delivery and documented allocation rationale

Best answer: D

Explanation: IPO allocations should be made through a fair, documented process that considers the customer’s investment profile and avoids improper inducements or conditions. Allocating to a customer with a documented speculative/growth objective is more consistent with high-volatility IPO risk than allocating to an income/capital preservation profile. Delivering required disclosure (final prospectus) and maintaining allocation records supports customer protection and distribution integrity.

Question 24

Topic: Function 3 — Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions

A U.S. public company commences a fixed-price issuer tender offer to repurchase up to 4.0 million shares at $25.00 per share, with an expiration date of May 31. On May 30, 5.0 million shares have been tendered, and management wants to (i) tell investors the proration will be exactly 80% and (ii) start accepting shares immediately to “lock in” the result, while still allowing holders to withdraw tenders through the expiration date (and through any extension). As the company’s investment banker, what is the BEST recommendation that satisfies the company’s size, oversubscription, and withdrawal-rights constraints?

• A. Accept the first 4.0 million shares tendered
• B. Accept shares on May 30 based on 80% proration
• C. Finalize proration after expiration, then accept and pay
• D. Extend the offer but eliminate withdrawal rights

Best answer: C

Explanation: In an oversubscribed partial tender offer, shares must be accepted on a pro rata (proration) basis from tendering holders, and holders generally retain withdrawal rights while the offer remains open (including during extensions). Because withdrawals can change the final tendered amount up to expiration, the company cannot “lock in” a final proration factor early. The operationally sound approach is to calculate proration after the offer closes and then accept and pay promptly.

Series 79 investment banking map

Use this map after the sample questions to connect individual items to underwriting, mergers and acquisitions, due diligence, valuation, conflicts, communications, and regulation decisions these Securities Prep samples test.

    flowchart LR
	  S1["Issuer transaction or banking scenario"] --> S2
	  S2["Identify deal type and participant role"] --> S3
	  S3["Analyze valuation due diligence and disclosure"] --> S4
	  S4["Apply conflicts communications and offering rules"] --> S5
	  S5["Choose compliant transaction step"] --> S6
	  S6["Document approvals and records"]

Quick Cheat Sheet

Mini Glossary

• Underwriting: Investment banking process for structuring, pricing, distributing, and settling offerings.
• Private placement: Non-public securities offering subject to suitability, disclosure, and regulatory constraints.
• Research report: Written analysis with investment views, disclosures, conflicts, and supervisory requirements.
• Communications: Retail and institutional content subject to approval, recordkeeping, and fair-balanced standards.
• Supervision: Firm process for review, approval, escalation, and evidence of compliance.

In this section

• Series 79: Data Analysis
  Try 10 focused Series 79 questions on Data Analysis, with explanations, then continue with the full Securities Prep practice test.
• Series 79: Underwriting and Financing
  Try 10 focused Series 79 questions on Underwriting and Financing, with explanations, then continue with the full Securities Prep practice test.
• Series 79: Mergers and Acquisitions
  Try 10 focused Series 79 questions on Mergers and Acquisitions, with explanations, then continue with the full Securities Prep practice test.
• Free Series 79 Full-Length Practice Exam: 75 Questions
  Try 75 free Series 79 practice questions across the official topic areas, with answers and explanations, then continue with the full Securities Prep question bank.