FINRA Series 79 Practice Test

Answer choices

1. A. Compare each alternative's cost, dilution, leverage, flexibility, investor base, benefits and risks, as the proposed design for the complete governed operational workflow.
2. B. Choose the security with the highest stated coupon, as the selected response to the described condition.
3. C. Use a DCF of the issuer as the sole basis for selecting the financing instrument, within the stated policy framework.
4. D. Select whichever structure requires the fewest documents, under the described . collection, analysis and evaluation of data (49%) criteria, within the stated policy framework.

Wrong-answer review

• B. Choose the security with the highest stated coupon, as the selected response to the described condition.: Incorrect. This choice does not satisfy the controlling fact in the scenario. Primary-source basis: The Series 79 outline requires analysis of financing alternatives, including debt/equity/hybrid and public/private transactions, followed by preliminary recommendations based on their benefits and risks.
• C. Use a DCF of the issuer as the sole basis for selecting the financing instrument, within the stated policy framework.: Incorrect. This choice does not satisfy the controlling fact in the scenario. Primary-source basis: The Series 79 outline requires analysis of financing alternatives, including debt/equity/hybrid and public/private transactions, followed by preliminary recommendations based on their benefits and risks.
• D. Select whichever structure requires the fewest documents, under the described . collection, analysis and evaluation of data (49%) criteria, within the stated policy framework.: Incorrect. This choice does not satisfy the controlling fact in the scenario. Primary-source basis: The Series 79 outline requires analysis of financing alternatives, including debt/equity/hybrid and public/private transactions, followed by preliminary recommendations based on their benefits and risks.

Answer choices

1. A. Obtain a revised prospectus incorporating the updated projections and distribute it to all investors, within this context.
2. B. Review the projections independently and include them in the offering document if deemed acceptable, within the defined security and accountability boundaries.
3. C. Notify the issuer of the discrepancy and request a correction to the existing document, for the specified implementation requirement.
4. D. Ignore the discrepancy if the projections are not material to the investment decision, within this design.

Answer choices

1. A. IPO restricted-person rules, as the selected response to the described condition.
2. B. Tender-offer equal-treatment requirements, within the described context.
3. C. Rule 5110 underwriting compensation, as selected.
4. D. Rule 5150 fairness-opinion committee procedures, for the stated requirement.

Answer choices

1. A. Ensure the prospectus contains all required disclosures as outlined in SEC rules
2. B. File a Form 8-K with the SEC detailing the offering terms, within organization-wide risk-and-accountability boundaries.
3. C. Distribute the prospectus to all potential investors, for the stated implementation and support requirements.
4. D. Conduct a thorough due diligence review of the issuer’s financials, within this design.

Answer choices

1. A. Evaluating the impact of interest rate fluctuations, in context.
2. B. Analyzing the company’s ability to meet its debt obligations, under this approach.
3. C. Determining the company’s credit rating, for the required operational result and control objective.
4. D. Assessing the potential for early prepayment penalties, for this scenario.

Answer choices

1. A. The issuer must satisfy the specific conditions of Rule 147A for the exemption to be available, within cross-functional operational-accountability boundaries.
2. B. The offering is exempt merely because the issuer calls it intrastate, for the stated security, delivery, and accountability requirements.
3. C. Rule 147A is a public-company reporting form, as the recommended implementation across the complete governed service lifecycle.
4. D. Rule 147A is the IPO restricted-person rule, as the primary implementation for the described business requirement.

Answer choices

1. A. Obtain a detailed credit analysis of the company’s historical performance, for the required operational result and control objective.
2. B. Consult with a legal counsel to determine the optimal legal structure for the financing, for consideration.
3. C. Review the company’s strategic plan to identify potential synergies with the financing options, within the defined security and accountability boundaries.
4. D. Conduct a sensitivity analysis on the projected cash flows for both options, as the organization’s selected response.

Answer choices

1. A. Assume the debt covenants are irrelevant to transaction structure, as the recommended implementation across the complete governed service lifecycle.
2. B. Begin final-round bidding before analyzing the covenants, as the recommended implementation across the complete governed service lifecycle.
3. C. Review the transaction structures and evaluate the effect of contractual obligations and debt covenants
4. D. Prepare the final proxy before choosing a structure, for the required operational result and control objective.

Answer choices

1. A. Only the issuer's preferred offer price, for the described technical objective and its associated operational control requirements.
2. B. Only the syndicate's management fee, as the selected approach for the stated technical and business outcome.
3. C. Investor interest, price levels, IOIs, prospective investors and how the issue is split among underwriters, within the proposed design.
4. D. A list of investors' tax returns, for the described technical objective and its associated operational control requirements, within this design.

Answer choices

1. A. Leverage metric, as the proposed design for the complete governed operational workflow.
2. B. Liquidity ratio, in the described situation.
3. C. Profit margin, for the specified implementation requirement.
4. D. Market multiple based on equity value, within the proposed design.