How to Pass the FINRA Series 79 Top-Off Exam

If you are a candidate for the FINRA Series 79 Exam, you should know that there have been substantial changes to the exam. FINRA rolled out a new qualification exam process last October. A new exam covering a broad range of industry fundamentals, the Securities Industry Essentials (SIE) Exam, is now a requirement for all persons that wish to become registered. This means that all Series 79 candidates must now pass two exams to become registered. The SIE can be taken before or after the new Series 79 top-off exam. In fact, the SIE Exam can be taken before a candidate is employed by a financial firm.

With this FINRA change, Series 79 candidates must demonstrate more general industry knowledge than before. They will face questions on risks, rewards, and suitability of general securities investment recommendations; retirement plans; customer accounts; and mutual funds and options, which were previously not tested for investment banking representatives.

The Series 79 top-off drills down into the specifics of the various spokes of investment banking, including valuation, capital markets, and mergers and acquisitions. The top-off exam can only be taken by persons who have secured employment and are “sponsored” by a broker-dealer.

Series 79 Top-Off Exam Cheat Sheet

The purpose of FINRA’s restructuring was to streamline the exams and eliminate redundancy. As a result, while the old Series 79 had 185 total questions, the new Series 79 top-off has just 85 questions, primarily investment-banking-focused questions. All questions on the Series 79 top-off exam are multiple-choice, and you must select from four choices.

Of these questions, 75 are scored, and 10 are experimental, unscored questions. These unscored questions will appear randomly throughout your exam, so you must approach them like any other question. These experimental questions are inserted to test their validity and performance before they are added to the exam’s question bank.

Important Series 79 top-off test facts are summarized in the table below.

Time allowed to complete the exam	2 hours and 30 minutes
Number of scored questions	75 (10 additional unscored)
Passing score	73% (55 questions correct)

Although the new Series 79 is shorter than the legacy exam, between the SIE and the Series 79 top-off, you’ll need to complete a total of 170 questions on two different tests for Series 79 registration.

Topics Tested on the Series 79 Top-Off

The 75-graded questions on the exam are broken down into three topic areas, which are detailed in the table below. The topics will be mixed together on the exam.

Topic	Number of Questions	Percent of the Test
Collection, Analysis, and Evaluation of Data	37	49%
Underwriting and New Financing Transactions, Types of Offerings, and Registration of Securities	20	27%
Mergers & Acquisitions, Tender Offers, and Financial Restructuring Transactions	18	24%
Total	75	100%

The first topic area – Collection, Analysis, and Evaluation of Data – focuses on financial statements and valuation. Types of questions in this section include adjusting for non-recurring items, calculating a company’s equity value and enterprise value, and pricing an IPO using a price-to-earnings multiple.

The second topic area – Underwriting and New Financing Transactions, Types of Offerings, and Registration of Securities – focuses on capital market activities. These topics will test candidates on the SEC registration process, exemptions from SEC registration, the role of the underwriters, and SEC filings.

The third and final topic area – Mergers & Acquisitions, Tender Offers, and Financial Restructuring Transactions – will focus on questions from these three areas. Examples include questions regarding the documents used in an M&A process, the rules relating to tender offers, and Chapter 7 versus Chapter 11 bankruptcies.

Series 79 Top-Off Exam Study Plan

The Series 79 Top-Off Exam typically requires 50–75 hours of total prep. New investment bankers should expect to commit around 75 total hours (3–5 weeks while working full-time). Experienced bankers who have comfort with financial statements, valuation, and M&A should allow for 40-50 hours of study (2–3 weeks while working full-time).

Follow the steps below to ensure you’re on track for success.

1. Review the Series 79 Action Plan, found in the Knopman Marks Training Center. Expertly crafted by our instructors, the Action Plan is a step-by-step guide on how to best tackle the exam and best utilize all the resources that Knopman Marks offers.
2. Take a 75-question assessment exam. This exam will help establish your baseline level of knowledge and provide insight into the types of practice questions to focus on and the level of mastery you will need to pass the examination. Your score on this exam is not important; the goal of the assessment is to understand what you are up against.
3. Next, read the textbook, with the goal of achieving a high-level, general understanding of the concepts. Do not focus on memorization or retention as you read. Do complete the exercises and quizzes as you go to help you retain and drill key concepts. If you are familiar with financial statements and valuation, start reading from Chapter 7 through the end of the book, as this will be the content that you are less familiar with. Then return to the first half of the textbook if necessary.
   Note: Pace your reading so that it accounts for no more than 25% of your total study time.
4. After the reading, complete a full-length (85-question) practice exam to see your improvement from the initial assessment.
5. Attend a live training or watch our online video lectures, which cover the most heavily tested concepts on the exam. Be sure to download the slides and take notes as you go, as this will help with your retention. These lectures will give you a good sense of how the information is tested along with important test-taking tips.
6. Once you have read the textbook and watched the lectures or attended a live class, shift your focus to the practice questions to help you further drill, understand, and retain the testable material. We suggest mixing full online exams of 85 questions on all topics with shorter, 20- to 30-question quizzes on specific chapters where you’ve identified weakness. For any concepts you are consistently getting wrong or do not understand, it’s important that you go back to your textbook and lecture notes to review and clarify those concepts. This will give you a targeted focus and help your knowledge of the content improve.
   Note: When creating online exams, always select unused questions only. Do not include previously answered or previously incorrect questions. Don’t memorize the questions. Instead, concentrate on understanding concepts so you can apply your knowledge to different presentations of the material.

7. Download and review the class summary and other supplements in the Training Center. The Series 79 top-off class summary is important and should be reviewed by candidates at least 2 or 3 times prior to the exam. Make sure to review your lecture notes a couple of times as well.
8. As you move closer to your exam date, you will also want to complete our three final exams found on the TestPrep site (Diagnostic Exam 1, Diagnostic Exam 2, and Benchmark Exam). These exams are all close in difficulty to the actual exam and have recently been updated to reflect topics that are heavily tested. We suggest spacing these out with the aim of completing the final benchmark exam about 2–3 days before your actual exam.
   Note: The goal is to score at least a 75% on the final benchmark and be consistently passing your final few online exams.
9. Pass your Series 79 Exam! If you’ve followed the plan and achieved the targeted scores, you are prepared to pass. Be confident that your efforts will give you the edge. It’s important that you trust your gut and do not change answers unless you have indisputable evidence that you should (e.g., you misread the question or made a math mistake).

A Few Important Series 79 Exam Insights

As you kick off your prep, keep in mind these exam insights.

• Although candidates tend to focus on the math and valuation content, it accounts for only about 10%–15% of the exam. Regulations and processes are much more important in terms of number of questions.
• Expect to see some non-traditional investment banking questions, such as ones involving bond math.
• Fairness opinions and exemptions from registration are both extremely heavily tested topics. Candidates should anticipate 10–15 total questions on these two topics.
• The questions on the exam are often lengthy with lots of extraneous information – expect to use more time on the actual exam than you did on the practice questions.

Knopman Marks looks forward to working with you on your Series 79 registration journey. We’re here to help every step of the way. Good luck with your study process.