10 free, exam-style Investment Banking Representative Exam (Series 79) practice questions with answers and explanations. No signup required. Work through them below, then take the full free Series 79 practice test to study every exam domain.
A publicly traded buyer with a P/E ratio of 22x is acquiring a target company with a P/E ratio of 16x in an all-stock transaction. Assuming no synergies are realized immediately, the transaction is MOST likely to be:
Correct answer: B - Accretive, because the buyer is acquiring earnings at a lower multiple than its own
An investment banker is calculating enterprise value for a target company that has a market capitalization of $800M, total debt of $300M, preferred stock of $50M, minority interest of $25M, and cash and cash equivalents of $175M. The enterprise value is:
Correct answer: D - $1,000M in the standard framework
A company has a public float of $600 million and has been subject to Exchange Act reporting requirements for 14 months. Its annual report on Form 10-K must be filed within:
Correct answer: C - 75 days of fiscal year-end in the typical case
An affiliate of a reporting company acquired 100,000 restricted shares eight months ago. Under Rule 144, the affiliate now wishes to sell these shares. If the average weekly trading volume over the past four weeks is 80,000 shares and 1% of the outstanding shares equals 120,000 shares, the MAXIMUM number of shares the affiliate may sell in any three-month period is:
Correct answer: B - 120,000 shares under accepted convention
A startup technology company plans to raise $15 million through a private placement. The company wants to advertise the offering on social media and its website to reach the broadest possible investor base. Under Regulation D, which exemption would BEST accommodate this approach?
Correct answer: C - Rule 506(c), because it permits general solicitation provided all purchasers are verified accredited investors
A FINRA member firm is engaged as the sell-side advisor in a $2 billion merger and has been asked to provide a fairness opinion to the target's board. The firm provided a $75 million credit facility to the acquiring company 14 months ago. Under FINRA Rule 5150, the firm is REQUIRED to:
Correct answer: C - Disclose the relationship and inform the company it may seek an additional opinion
A bidder commences a cash tender offer for all outstanding shares of a target company at $45 per share. After 14 business days, the bidder increases the offer price to $50 per share. Under Rule 14e-1, the tender offer must now remain open for a MINIMUM of:
Correct answer: A - An additional 10 business days from the date of the price increase in the typical case
A company files for Chapter 11 bankruptcy protection. The company has the following outstanding obligations: $200M in senior secured bank debt, $150M in unsecured bonds, $50M in subordinated convertible notes, and $30M in DIP financing obtained after the filing. In what order of priority will these claims be satisfied?
Correct answer: A - DIP financing, senior secured, unsecured bonds, subordinated convertible notes
A corporation with a public float of $900 million and no history of securities violations files a shelf registration statement for a mixed offering of debt and equity. Under Securities Act Rule 405, this issuer is classified as a:
Correct answer: B - Well-Known Seasoned Issuer, eligible for automatic shelf registration
In a firm commitment IPO, the underwriters sell the full offering to the public and an additional 12% of the original shares through the over-allotment option. Three weeks after the effective date, the stock price has fallen below the offering price. The managing underwriter will MOST likely:
Correct answer: C - Cover the short position by purchasing shares in the open market at the lower price
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