FREE Series 79 Study Guide 2026: A Complete, FINRA-Aligned Walkthrough

This free Series 79 study guideis the core of your Series 79 study materials — it walks through every topic on FINRA’s Investment Banking Representative exam, organized into the same three job functions FINRA uses to build the test.^[2]

And it’s interactive, not a wall of text: every function has built-in checkpoint quizzes, worked valuation scenarios, and flashcards, so you learn by doing — not just reading.

Read it function by function, test yourself at each checkpoint, then round out your free Series 79 study resources with our practice exam and flashcards.

Series 79 Exam Snapshot

The Series 79 is a representative-level FINRA qualification. Two important currency points first: the exam is 75 scored questions in 2 hours 30 minutes, not the 175-question, 5-hour format you will still see quoted on many older sites — FINRA cut the length in 2018 when the SIE absorbed the general-knowledge content.^[5] And the SIE is a co-requisite: you must pass both.^[3]

The exam is dominated by one function — data, analysis and valuation is nearly half the test — so spend your time accordingly:^[2]

Function 1 · Collection, Analysis & Evaluation of Data

Function 1 — 49% of the exam (37 questions), the single most important section. This is where valuation, financial-statement and ratio analysis, and due diligence live. If you master one function cold, make it this one.

1.1 Collection of Data

Investment-banking analysis is built on data pulled from commercial databases (Bloomberg, Capital IQ, FactSet, PitchBook — know the concept of pulling comps, precedent deals, and market data, not brand trivia) and, above all, from EDGAR, the SEC’s filing system.^[7] Public-company filings are the backbone of comparable-company and precedent-transaction work. Know which form carries which information:

A banker may communicate with clients, capital-markets specialists, the research department, and the syndicate desk — but must coordinate through legal & compliance. FINRA Rule 2241erects the information barrier (“Chinese wall”) that insulates research from investment banking, restricting analyst participation in pitches and barring IB influence over research.^[8] The separation of research from banking is high-yield.

1.2 Analysis & Evaluation of Data

The quantitative core of the exam. Start with the three financial statements, then the ratio families, then valuation.

Bankers compress those statements into ratios. The Series 79 picks items from four families — know which bucket each ratio belongs to and how it’s built:

Valuation is the heart of Function 1. The first thing to lock in is the enterprise value bridge — and the sign on each component (cash is subtracted):

There are three core valuation methodologies, usually shown together as a valuation “football field”, with an LBO analysis providing the floor:

The DCF deserves its own walk-through because the exam tests every input. You project unlevered free cash flows, discount them at the WACC, add the present value of a terminal value, and sum:

$\text{WACC} = \frac{E}{V}R_e + \frac{D}{V}R_d(1-T)$

The cost of debt is multiplied by $(1-T)$ because interest is tax-deductible. The cost of equity is usually estimated with the CAPM, $R_e = R_f + \beta(R_m - R_f)$. Terminal value uses either the Gordon Growth model, $TV = \frac{FCF_n(1+g)}{WACC-g}$, or an exit multiple.

Two more high-yield analysis points. Inventory accounting: in rising prices, FIFO gives lower COGS, higher income and taxes, and higher ending inventory; LIFO does the reverse, with a LIFO reserve bridging the two. Investor and structure types: a QIB manages $\ge\$100\text{M}$ in securities (the Rule 144A gate); a qualified purchaser holds $\ge\$5\text{M}$ in investments; and an S-corp/LLC/MLP/REIT are pass-through structures (a REIT must distribute $\ge 90\%$ of taxable income).

1.3 Due Diligence Activities

Due diligence is the banker’s process for satisfying the disclosure standard at the heart of securities liability:

Offering documents must not contain an untrue statement of a material fact, nor omit a material fact necessary to make the statements not misleading.

That is the §11 / §12 / Rule 10b-5 material-misstatement-or-omission standard. The payoff for diligent work is legal: Securities Act Rule 176defines the “reasonable investigation” that gives underwriters the due diligence defense to Section 11 liability for a false registration statement.^[10]

Regulatory overlay: basic disclosure flows from the Sarbanes-Oxley Act.^[11] Memorize the Title IV sections — §402 prohibits most personal loans to executives, §403 requires disclosure of insider transactions, and §404(the famous one) requires management’s assessment of internal control over financial reporting.

Function 2 · Underwriting, New Financing Transactions, Offerings & Registration

Function 2 — 27% of the exam (20 questions). This is the Securities Act of 1933 function: how new securities are registered and distributed, plus the syndicate mechanics of pricing and stabilizing a deal — and the exemptions that let an issuer skip registration. Keep the two acts straight: the ’33 Act governs new issues; the ’34 Act governs trading and ongoing reporting.

2.1 Public Offerings — Securities Act §5

Section 5 is the master prohibition, and it divides a registered offering into three windows. Knowing exactly what is permitted in each is one of the most heavily tested topics in Function 2:

Know the liability and definition sections cold: §2(a)(10) defines a prospectus; §7 and §10 set registration-statement and prospectus contents; §11 imposes liability for a false registration statement (the Rule 176 defense statute); §12 covers prospectus/communication liability — §12(a)(1) for selling in violation of §5 and §12(a)(2) for a material misstatement; and §17 is anti-fraud. Communication safe harbors define what is not a prospectus: Rule 134 (tombstones), Rules 137/138/139 (research around a distribution), and the free writing prospectusunder Rules 164 & 433.^[16]

Two structures speed seasoned issuers to market: shelf registration (Rule 415) lets an issuer register once and sell over time, and a Well-Known Seasoned Issuer (WKSI) gets automatic shelf registration under Rule 405.^[15] On the FINRA side, Rule 5110 (the Corporate Financing Rule) reviews underwriting compensation for fairness, and Rule 5121 governs offerings in which the underwriter has a conflict of interest, often requiring a Qualified Independent Underwriter.^[13][14]

2.2 The Underwriting Syndicate

The syndicate runs on a set of documents — the Agreement Among Underwriters (AAU) among syndicate members, the Selected Dealers’ Agreement for the broader selling group, the issuer-to-lead Underwriting Agreement, and lock-up agreements(insiders agree not to sell for ~90–180 days post-IPO). The commitment type sets who carries the risk:

Funds-handling and anti-manipulation rules attach here too: Rule 15c2-4 requires funds in contingency (best-efforts/AON) offerings to be held in escrow until the contingency is met, and Regulation M Rules 101 & 102 restrict distribution participants and issuers from bidding for the offered security during the restricted period.^[17]

2.3 Execution & Distribution

After marketing the deal (internal sales memo, road show, locating investors), the syndicate builds the book — collecting indications of interest into an IOI/order book — and then sizes, prices, and times the deal based on demand, market conditions, and valuation. The stabilization mechanics are high-yield:

2.4 Post-execution Activities

After the deal closes, the banker maintains the deal file — correspondence, pitch and marketing archives, road-show materials, book-building documents, and the underwriting papers — under the books-and-records rules. Exchange Act Rule 17a-3 dictates records that must be made and 17a-4 records that must be preserved (retention periods, WORM storage), with FINRA Rule 4511 on general recordkeeping. FINRA Rule 11880 governs the timely settlement of syndicate accounts.

2.5 Securities Exempt from Registration

Some offerings skip §5 because of the type of security. Rules 147 / 147A exempt genuine intrastate offerings. Regulation A (“Reg A+”) is a conditional small-issues exemption — a “mini-IPO”:

2.6 Transactions Exempt from Registration — Private Placements

Private placements are core investment-banking work. The statutory exemption is §4(a)(2) (transactions not involving a public offering), and Regulation D is the safe harbor that operationalizes it:

Resales of restricted/control securities run through Rule 144 (holding period — 6 months for reporting issuers, 1 year for non-reporting — plus volume limits for affiliates) and Rule 144A (private resale to QIBs).^[20][21] Regulation S (Rules 901–904) exempts offshore offers and sales. The banker prepares the private-offering documents — the PPM, an NDA, an anonymized teaser, and a security term sheet — and FINRA Rule 5122 governs member private placements of their own securities.

Function 3 · M&A, Tender Offers & Financial Restructuring

Function 3 — 24% of the exam (18 questions). The advisory function: the M&A process and structuring, fairness opinions, the Williams Act tender-offer rules, proxy and business-combination forms, and bankruptcy priority. Here is the full sell-side arc you should be able to walk from memory:

3.1 M&A: Sell-side Transactions

You begin with an engagement letter (scope, fees, exclusivity, tail period), then review transaction structures and the market/regulatory/tax environment. The most-tested structuring choice is stock vs. asset sale:

Tax structuring tools include the tax-free reorganization (IRC §368), recapitalizations, and the §338(h)(10) election (treat a stock buy as an asset buy for tax), plus the §280G golden-parachute excise tax on excess change-of-control payments. Marketing flows from an NDA to a teaser to the CIM to a bidding-procedures letter and management presentations. The bidding process collects non-binding IOIs, runs the data room, and ends in letters of intent and a definitive agreement — with Hart-Scott-Rodino antitrust clearance as a gate.

3.2 M&A: Buy-side Transactions

On the buy-side you assess strategy and capacity, identify defensive impediments, and run the full valuation suite. Know the three classic takeover defenses:

The buy-side produces stand-alone and pro forma valuations via the four core M&A models — comparable companies, precedent transactions, DCF, and LBO analysis. An LBO sets the valuation floor: a sponsor buys with heavy debt and targets an IRR of roughly $20\text{–}25\%$over a 3–7 year hold. The banker then runs the accretion/dilution analysis on the combined entity and arranges acquisition financing.

3.3 Fairness Opinions

A fairness opinion is a written opinion that the consideration in a deal is fair, from a financial point of view, to shareholders. It is not a recommendation on how to vote, a guarantee of value, or legal/tax advice. It is presented to the board or a special committee and disclosed in the proxy.

Under FINRA Rule 5150, the opinion must disclose conflicts of interest — contingent (success) fees, prior relationships, and whether information was independently verified — and whether a fairness committee approved it.^[23]

3.4 Signing to Closing

Between signing the definitive agreement and closing, the parties prepare the disclosure documents and clear the conditions. A stock-for-stock merger registers on Form S-4 and solicits votes through a Schedule 14Aproxy (Item 14 carries the M&A disclosure); a cash tender offer uses Schedule TOand the target’s 14D-9.^[28]

Closing conditions include regulatory approvals (HSR), the shareholder vote, financing, and MAC/MAE (material adverse change) clauses. Rule 145 deems certain reclassifications/mergers an offer/sale, and Rules 165 / 425 permit and require filing of business-combination communications.

3.5 Tender Offer Regulations

A tender offer is a public offer to buy shares directly from holders. The Williams Act (Exchange Act §§13(e), 14(d), 14(e)) regulates its disclosure, timing, and equal treatment. Walk the timeline and the equal-treatment rules:

3.6 Financial Restructuring & Bankruptcy

When a company is distressed, the banker must know the absolute priority rule — the order in which claims are paid. Memorize the waterfall:

Loan documents drive a restructuring: a credit agreement (loans) or indenture (bonds, with a trustee under the Trust Indenture Act) sets repayment, prepayment, events of default, and negative covenants (restricting new debt, dividends, and asset sales) plus financial covenants (e.g., maximum leverage). Know the bankruptcy chapters and tools:

How to Use This Study Guide

A study guide is a map, not the whole territory — use it alongside your prep provider’s materials and our practice tools, and lean hard into Function 1:

Series 79 Glossary

Quick definitions for the terms you’ll see most on the Series 79 exam:

§338(h)(10) election

Treats a stock purchase as an asset purchase for tax purposes (giving the buyer a step-up in basis) while legally buying stock.

§363 sale

A sale of assets free and clear within bankruptcy — M&A out of Chapter 11, often via a 'stalking horse' bid.

Absolute priority rule

Bankruptcy payment order: senior secured → junior secured → unsecured → mezzanine → preferred → common (the residual).

Accredited investor

Qualifies by income ($200K individual / $300K joint, 2 years), net worth (>$1M excluding home), or professional credentials (Reg D Rule 501).

Accretion/dilution

Whether a deal raises (accretive) or lowers (dilutive) the acquirer's pro forma EPS. A stock deal is generally accretive if the acquirer's P/E exceeds the target's.

Best efforts

The underwriter acts only as an agent and takes no inventory risk; unsold shares are returned to the issuer.

Chapter 11

Reorganization bankruptcy: the debtor keeps operating and proposes a plan of reorganization for creditor vote and court confirmation.

Comparable companies analysis

Market-based valuation applying public peers' trading multiples (EV/EBITDA, P/E) to the subject company. Minority/standalone, so usually below precedents.

Confidential Information Memorandum (CIM)

The detailed marketing document a sell-side advisor sends to qualified, NDA-bound buyers describing the target.

DIP financing

Debtor-in-possession financing — new loans to a bankrupt company granted super-priority over existing claims.

Discounted cash flow (DCF)

Intrinsic valuation: the present value of projected unlevered free cash flows plus a terminal value, discounted at WACC.

EBITDA

Earnings before interest, taxes, depreciation & amortization $= \text{EBIT} + \text{D\&A}$ — a proxy for operating cash flow used in EV/EBITDA.

EDGAR

The SEC's electronic system for public-company filings — the primary data source for comparable-company and precedent-transaction analysis.

Enterprise value (EV)

The total value of a company's operations, capital-structure-neutral. $\text{EV} = \text{Equity value} + \text{Debt} + \text{Preferred} + \text{Minority interest} - \text{Cash}$. Pairs with EBITDA/EBIT/Sales.

Equity value (market cap)

The value of the common equity $= \text{share price} \times \text{diluted shares outstanding}$. Pairs with net income / EPS (post-interest metrics).

Fairness opinion

A written opinion that the consideration in a deal is financially fair to shareholders. FINRA Rule 5150 governs conflict disclosure.

Firm commitment

The underwriter buys the entire issue as principal and bears the risk of unsold shares — the most common IPO structure.

Form S-4

The registration statement for securities issued in business combinations (stock-for-stock mergers and exchange offers).

Free writing prospectus (FWP)

Any written offer beyond the statutory prospectus; permitted post-filing under Rules 164 and 433.

Greenshoe (over-allotment option)

Lets the syndicate sell up to 15% more shares than offered; used to stabilize the price after the offering.

Hart-Scott-Rodino (HSR) Act

Requires pre-merger notification to the FTC and DOJ plus a waiting period before deals above size thresholds can close.

LBO analysis

A leveraged-buyout model: a sponsor buys with heavy debt targeting an IRR. Sets a valuation floor — the most a sponsor could pay.

Net debt / EBITDA

The headline leverage ratio in IB and LBO analysis; net debt = total debt − cash.

Poison pill (shareholder rights plan)

A takeover defense that dilutes a hostile acquirer who crosses an ownership threshold.

Precedent transactions analysis

Valuation using multiples paid in past M&A deals. Includes a control premium, so it typically yields the highest values.

QIB

Qualified Institutional Buyer — an institution that owns/manages $\ge$$100M in securities; the Rule 144A resale gatekeeper.

Quick (acid-test) ratio

$\frac{\text{Current assets} - \text{inventory}}{\text{current liabilities}}$ — a stricter liquidity test than the current ratio.

Red herring (preliminary prospectus)

The prospectus used during the waiting period; it has no final price and cannot be used to accept orders or money.

Regulation A

A 'mini-IPO' exemption: Tier 1 up to $20M / 12 months, Tier 2 up to $75M / 12 months (preempts state blue-sky).

Regulation D

The safe harbor for §4(a)(2) private placements: Rule 504 ($\le$$10M), 506(b) (no solicitation, up to 35 non-accredited), 506(c) (solicitation, accredited-only + verify).

Rule 144A

Permits resale of restricted securities to QIBs, creating a deep institutional private market.

Rule 14d-10 (all-holders / best-price)

The equal-treatment rules: the offer must be open to all holders of the class, and all must receive the highest price paid.

Rule 14e-1

Requires a tender offer to stay open at least 20 business days, with +10 business days after a change in price or percentage.

Rule 14e-3

Bars trading on material nonpublic information in the tender-offer context — no fiduciary breach is required.

Rule 176

Securities Act rule defining the circumstances of a 'reasonable investigation' — the due diligence defense to Section 11 liability.

Schedule 13D

Filed by a >5% beneficial owner with intent to influence or control the issuer (the activist filing). Schedule 13G is the short-form for passive holders.

Schedule 14A (proxy statement)

The proxy-solicitation document under Regulation 14A; Item 14 covers M&A disclosure for a shareholder vote.

Schedule TO

The tender-offer statement filed by the bidder. The target responds on Schedule 14D-9.

Section 5

The Securities Act master prohibition that divides a registered offering into the pre-filing, waiting, and post-effective periods.

Shelf registration (Rule 415)

Registering securities once to sell 'off the shelf' over time; WKSIs get automatic effectiveness under Rule 405.

Teaser

An anonymized one-page summary used to attract initial buyer interest before an NDA is signed.

Tender offer

A public offer to buy shares directly from holders, for a limited time, usually at a premium; regulated by the Williams Act.

Terminal value

The value of cash flows beyond the projection period — Gordon Growth $\frac{FCF_n(1+g)}{WACC-g}$ or an exit multiple (EBITDA × multiple).

Underwriter's spread (gross spread)

The underwriter's compensation $= \text{management fee} + \text{underwriting fee} + \text{selling concession}$.

WACC

Weighted average cost of capital $= \frac{E}{V}R_e + \frac{D}{V}R_d(1-T)$; the DCF discount rate reflecting all capital providers.

Free Series 79 Study Materials & Resources

Everything you need to pass the Series 79 is free here — no paywall, no sign-up. This guide is the foundation; pair it with the rest of our free Series 79 study materials for active recall, timed practice, and last-minute review:

• Series 79 Practice Exam — full-length, timed, FINRA-style questions with explanations.
• Series 79 Flashcards — active-recall decks for the high-yield facts and formulas.

Series 79 Study Guide FAQ

References

1. 1.FINRA. “Series 79 — Investment Banking Representative Exam.” FINRA.org. ↑
2. 2.FINRA. “Series 79 Content Outline (2025, PDF).” FINRA.org. ↑
3. 3.FINRA. “Securities Industry Essentials (SIE) Exam.” FINRA.org. ↑
4. 4.FINRA. “Schedule of Registration and Examination Fees.” FINRA.org. ↑
5. 5.FINRA. “Exam Restructuring (SIE + specialized exams).” FINRA.org. ↑
6. 6.U.S. Securities and Exchange Commission. “The Laws That Govern the Securities Industry.” SEC.gov. ↑
7. 7.U.S. Securities and Exchange Commission. “EDGAR — Search and Access.” SEC.gov. ↑
8. 8.FINRA. “Rule 2241 — Research Analysts and Research Reports.” FINRA.org. ↑
9. 9.Electronic Code of Federal Regulations. “17 CFR § 240.13d-1 — Filing of Schedules 13D and 13G.” eCFR.gov. ↑
10. 10.Electronic Code of Federal Regulations. “17 CFR § 230.176 — Reasonable Investigation (Due Diligence Defense).” eCFR.gov. ↑
11. 11.U.S. Securities and Exchange Commission. “Sarbanes-Oxley Act of 2002.” SEC.gov. ↑
12. 12.U.S. Securities and Exchange Commission. “Beginners' Guide to Financial Statements.” SEC.gov. ↑
13. 13.FINRA. “Rule 5110 — Corporate Financing Rule.” FINRA.org. ↑
14. 14.FINRA. “Rule 5121 — Public Offerings with Conflicts of Interest.” FINRA.org. ↑
15. 15.Electronic Code of Federal Regulations. “17 CFR § 230.415 — Shelf Registration.” eCFR.gov. ↑
16. 16.Electronic Code of Federal Regulations. “17 CFR § 230.433 — Free Writing Prospectus.” eCFR.gov. ↑
17. 17.Electronic Code of Federal Regulations. “17 CFR Part 242 — Regulation M (Anti-Manipulation).” eCFR.gov. ↑
18. 18.FINRA. “Rule 5130 — Restrictions on the Purchase and Sale of IPOs.” FINRA.org. ↑
19. 19.U.S. Securities and Exchange Commission. “Regulation D Offerings.” SEC.gov. ↑
20. 20.U.S. Securities and Exchange Commission. “Accredited Investor.” SEC.gov. ↑
21. 21.Electronic Code of Federal Regulations. “17 CFR § 230.144A — Resale to Qualified Institutional Buyers.” eCFR.gov. ↑
22. 22.U.S. Securities and Exchange Commission. “Regulation A.” SEC.gov. ↑
23. 23.FINRA. “Rule 5150 — Fairness Opinions.” FINRA.org. ↑
24. 24.Federal Trade Commission. “Hart-Scott-Rodino Premerger Notification Program.” FTC.gov. ↑
25. 25.Electronic Code of Federal Regulations. “17 CFR § 240.14e-1 — Unlawful Tender Offer Practices (20-Day Rule).” eCFR.gov. ↑
26. 26.Electronic Code of Federal Regulations. “17 CFR § 240.14d-10 — Equal Treatment of Security Holders.” eCFR.gov. ↑
27. 27.Electronic Code of Federal Regulations. “17 CFR § 240.14e-3 — Transactions in Securities on Material Nonpublic Information.” eCFR.gov. ↑
28. 28.U.S. Securities and Exchange Commission. “Form S-4 — Registration of Securities in Business Combinations.” SEC.gov. ↑
29. 29.United States Courts. “Chapter 11 — Bankruptcy Basics.” USCourts.gov. ↑
30. 30.FINRA. “Rule 1220 — Registration Categories.” FINRA.org. ↑

Sources for the concept answers

Every answer in the Series 79 concept questions above is drawn from an official primary source:

1. U.S. Securities and Exchange Commission. “Market Capitalization.” Investor.gov, accessed 18 June 2026.
2. U.S. Securities and Exchange Commission. “Present Value.” Investor.gov, accessed 18 June 2026.
3. U.S. Securities and Exchange Commission. “Cost of Capital and Discount Rates (Investor Bulletin).” Investor.gov, accessed 18 June 2026.
4. U.S. Securities and Exchange Commission. “How to Read a 10-K / Financial Statements.” Investor.gov, accessed 18 June 2026.
5. U.S. Securities and Exchange Commission. “Underwriter.” Investor.gov, accessed 18 June 2026.
6. U.S. Securities and Exchange Commission. “Stabilization and Regulation M.” SEC.gov, accessed 18 June 2026.
7. U.S. Securities and Exchange Commission. “Tender Offer.” Investor.gov, accessed 18 June 2026.
8. U.S. Securities and Exchange Commission. “Private Equity Funds.” Investor.gov, accessed 18 June 2026.
9. U.S. Securities and Exchange Commission. “Corporate Bankruptcy — What Happens to Investors.” Investor.gov, accessed 18 June 2026.

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