How to Prepare for the Series 79 Exam: A Banker's Guide

The Series 79 exam, also known as the Investment Banking Representative Exam, is a critical milestone for individuals seeking to become registered investment bankers in the United States. This exam assesses a candidate's knowledge of investment banking activities, such as mergers and acquisitions (M&A), capital raising, and financial analysis. Success in the Series 79 exam is essential for those who wish to work in investment banking, private equity, and other related fields.

For bankers, preparing for the Series 79 exam can be an intense and challenging process. It requires a solid understanding of a broad range of financial concepts, regulations, and industry practices. However, with the right preparation strategy, it is entirely possible to pass the exam and embark on a rewarding career in investment banking.

In this guide, we will walk you through how to prepare for the Series 79 exam, covering everything from understanding the exam structure to effective study techniques, essential resources, and tips for managing your time effectively. Whether you are a seasoned financial professional or new to the field, this guide will provide you with the insights needed to excel.

Understanding the Series 79 Exam

Before diving into the preparation process, it's important to fully understand what the Series 79 exam entails. The exam is designed to test the competency of a candidate in areas relevant to investment banking. It consists of 175 multiple-choice questions, divided into four sections:

1. Seeks to Determine the Candidate's Knowledge of Investment Banking

   • Capital raising (equity and debt offerings)
   • Mergers and acquisitions (M&A)
   • Public offerings and corporate finance

2. Seeks to Assess a Candidate's Knowledge of Regulatory and Legal Framework

   • Securities laws (particularly those governed by the SEC)
   • FINRA rules and regulations
   • Anti-money laundering and fraud prevention

3. Financial Analysis and Tools

   • Valuation methods (comparable company analysis, precedent transactions, discounted cash flow)
   • Financial statements analysis (income statement, balance sheet, cash flow)

4. Negotiation and Client Relations

   • Deal structuring
   • Client communication
   • Negotiation strategies in capital markets transactions

Key Topics Covered in the Series 79 Exam:

• Investment Banking and Capital Markets
• Mergers and Acquisitions
• Financing Transactions
• Financial Analysis and Valuation Techniques
• SEC Regulations and FINRA Rules
• Legal Considerations in Securities and Investment Banking

The exam is administered by FINRA (Financial Industry Regulatory Authority), and to qualify for the Series 79, you must be sponsored by a FINRA-member firm. Candidates must score at least 73% to pass the exam. The exam's format is a combination of theory-based questions and scenario-based questions, so it tests both your conceptual knowledge and your ability to apply that knowledge to real-world scenarios.

Step 1: Understand the Exam Structure

The first step in preparing for the Series 79 exam is to familiarize yourself with the structure of the exam. Knowing what to expect will reduce test-day anxiety and ensure that you are focused on the correct areas.

• Number of Questions: The Series 79 exam consists of 175 multiple-choice questions, out of which 150 are scored, and 25 are pre-test questions. These pre-test questions do not count toward your final score, but you must answer them as if they are scored.
• Time Allotted: You will have 225 minutes (approximately 4 hours) to complete the exam. This is a generous time limit, and it is important to pace yourself so that you have time to carefully consider each question.
• Exam Sections:
  1. Section 1: Knowledge of Investment Banking (35% of the exam)
  2. Section 2: Understanding of the Securities and Regulatory Framework (25% of the exam)
  3. Section 3: Financial and Valuation Analysis (20% of the exam)
  4. Section 4: Negotiation and Client Relations (20% of the exam)

The weight of each section can help you prioritize your study time, giving more focus to the areas that are more heavily weighted in the exam.

Step 2: Develop a Study Plan

Effective preparation for the Series 79 exam starts with creating a solid study plan. The key to passing the exam is consistent and structured studying. Here's a step-by-step approach to creating a study plan:

Determine Your Study Timeline

The amount of time you need to prepare will vary depending on your current knowledge and experience in investment banking. For most candidates, studying for the Series 79 exam takes around 6-8 weeks, with 2-3 hours of study each day.

If you are already familiar with investment banking concepts, you may be able to study in a shorter time frame, but if you are new to the industry, you may need more time to familiarize yourself with the core concepts.

Set Realistic Study Goals

Break down the key topics into manageable chunks, and set specific goals for each study session. For example, in the first week, you could focus on understanding the basics of investment banking and capital markets, while in the second week, you could delve deeper into financial analysis and valuation methods.

Prioritize the High-Weight Sections

As mentioned, certain sections of the exam are more heavily weighted than others. Be sure to allocate more study time to the topics with higher percentages, such as Investment Banking and Capital Markets, as well as Regulatory Frameworks.

In contrast, although the Negotiation and Client Relations section is crucial, it has a smaller weight and may not require as much focus.

Consistent Study Routine

Develop a consistent study routine that includes both reading and practice questions. Aim to review your study materials daily, and regularly test your knowledge with practice exams. The more practice questions you complete, the more familiar you will become with the exam format and types of questions you may encounter.

Incorporate Active Recall and Spaced Repetition

Active recall is a proven study technique where you actively attempt to retrieve information from memory rather than passively reviewing notes. Spaced repetition involves reviewing material at increasing intervals to help retain information over time. Use these techniques to reinforce what you learn.

Step 3: Gather the Right Resources

A key component of effective Series 79 exam preparation is having the right study resources. Several study materials and providers are available, but it is essential to use resources that are comprehensive, up-to-date, and aligned with the exam content outline.

Recommended Study Materials

• Series 79 Exam Textbooks: Textbooks or study guides designed specifically for the Series 79 exam will help you understand complex topics and concepts. Look for textbooks that break down difficult concepts and provide plenty of examples, especially those related to financial modeling and valuation.
• Online Courses and Video Lectures: Many providers offer online video courses, which can provide a more interactive approach to studying. These courses are often taught by industry professionals and are great for visual learners.
• Practice Exams and Question Banks: Practice exams are an essential resource for Series 79 preparation. Taking practice exams will not only familiarize you with the exam format but also help you identify areas where you need to improve. Many study programs offer access to practice exams and question banks, which allow you to simulate the real exam experience.

Study Program Providers

Several companies specialize in Series 79 exam preparation, offering study packages that include textbooks, online courses, practice exams, and more. Some of the leading providers are:

• Kaplan Financial Education
• Exam Prep (formerly known as STC)
• Wiley Efficient Learning
• Bloomberg Exam Prep

Choose a provider based on your preferred study method, timeline, and budget.

Step 4: Take Practice Exams

Once you've gone through your study materials, it's time to start taking practice exams. Practice exams are one of the most valuable tools for exam preparation, as they help you identify your strengths and weaknesses. They also improve your time management skills and give you an opportunity to familiarize yourself with the structure and wording of the questions.

Simulate Test Conditions

When taking practice exams, try to simulate actual test conditions as much as possible. Set a timer for 225 minutes and complete the exam without distractions. This will help you get accustomed to the pressure of time and ensure that you can complete the exam within the allotted time.

Review Your Mistakes

After taking a practice exam, thoroughly review your answers. For any questions you answered incorrectly, make sure to understand why your choice was wrong and what the correct answer should be. This review process will reinforce your learning and help you avoid similar mistakes on the real exam.

Track Your Progress

Take multiple practice exams over the course of your study period to track your progress. Pay attention to areas where you consistently perform poorly, and allocate additional study time to those topics.

Step 5: Test Day Preparation

As the exam day approaches, your preparation should shift from studying new material to reviewing key concepts and reinforcing your knowledge. Here are some final tips to help you prepare:

• Review Key Notes: Go over your notes and flashcards one last time to ensure that you have a solid grasp of the important concepts.
• Stay Calm and Focused: On the day of the exam, make sure you get plenty of rest the night before and eat a healthy breakfast. Stay calm, and approach each question with a clear and focused mind.
• Pace Yourself During the Exam: Keep an eye on the clock to ensure that you don't spend too much time on any one question. If you're unsure about a question, move on and come back to it later.

Conclusion

The Series 79 exam is a challenging but attainable goal for those pursuing a career in investment banking. By following the preparation steps outlined in this guide, you can approach the exam with confidence and increase your chances of success. With a well-structured study plan, the right resources, and a disciplined study routine, you'll be prepared to pass the Series 79 exam and take the next step in your investment banking career.

Good luck with your exam preparation!

View Product