FINRA Series 79 content outline and weights

The current Series 79 content outline is organized around three functions performed by an entry-level Investment Banking Representative. Function 1, Collection, Analysis and Evaluation of Data, accounts for 37 scored questions or 49% of the exam. Function 2, Underwriting/New Financing Transactions, Types of Offerings and Registration of Securities, accounts for 20 questions or 27%. Function 3, Mergers and Acquisitions (M&As), Tender Offers and Financial Restructuring Transactions, accounts for 18 questions or 24%. The scored total is 75; the exam also includes five unscored pretest items.

Use the current FINRA outline, dated 2025, when organizing study. Older Series 79 material may show four functions and a much larger examination. The current exam uses a three-function structure. Old chapters can still explain accounting, valuation, offerings, and M&A concepts, but map every chapter to the current outline before using it as a completeness checklist.

Function 1: collect, analyze and evaluate data

Function 1 is the largest section, but it is not one narrow subject. It begins with finding and verifying company, market, industry, issuance, and transaction information. Sources can include company filings, financial databases, market data, prior transactions, media, and internal specialists. The task is to assemble relevant evidence, recognize gaps, and communicate with the appropriate people while observing information barriers and compliance controls.

The analysis portion covers financial statements and models. Candidates should understand balance sheet items such as cash, receivables, inventory, PP&E, goodwill, current liabilities, debt, preferred stock, and shareholders' equity. The income statement includes revenue, operating expenses, depreciation and amortization, operating profit, interest, taxes, and net income. The cash flow statement distinguishes operating, investing, and financing cash flows. The exam may test how these measures relate or ask what an observed movement suggests.

Ratios and valuation metrics form a substantial part of the function. Liquidity topics include working capital, current and quick ratios, cash collection, and turnover. Profitability includes margins, EPS, ROA, ROE, ROIC, EBITDA, and normalized earnings. Leverage includes debt-to-capital, debt-to-equity, interest coverage, and net debt to EBITDA. Valuation concepts include market capitalization, enterprise and equity value, EV/EBITDA, EV/sales, P/E, price to book, DCF, DDM, WACC, IRR, accretion or dilution, and sum-of-the-parts analysis.

A small example shows why definitions matter. If a company has 10 million diluted shares at $15 per share, its equity market capitalization is $150 million. If it also has $45 million of debt and $5 million of cash, simplified enterprise value is $190 million. Dividing EV by EBITDA is a different multiple from dividing share price by EPS. One compares the operating business with earnings before interest and taxes; the other measures equity value relative to per-share earnings.

The outline also includes comparable-company and precedent-transaction analysis. A peer set should make sense for the business, growth profile, profitability, geography, and capital structure. A higher multiple is not automatically evidence that a company is overvalued; the difference might reflect growth, margins, risk, or an imperfect comparison. A precedent transaction may include a control premium or market conditions that do not apply to today's subject company.

Another task is evaluating financing strategies and transaction alternatives. Candidates may compare debt, equity, hybrid securities, public offers, private placements, PIPEs, primary and secondary offerings, or forward sales. The right choice depends on the issuer's funding need, dilution tolerance, balance sheet, ownership, timing, investor base, and disclosure obligations. The outline includes due diligence and preliminary recommendations, so questions may ask what information should be verified before an analysis is presented.

Function 2: underwriting and new financing

Function 2 moves from analysis to structuring and execution. It covers underwriting and new financing transactions, public and private offering types, and securities registration. Candidates should distinguish a primary issuance, where proceeds go to the issuer, from a secondary sale, where existing holders sell shares. A follow-on can include primary shares, secondary shares, or both. A private placement uses an exemption and investor framework that differs from a registered public offering.

The outline includes transaction participants and the mechanics of bringing securities to market. An underwriting syndicate helps distribute an offering; the book-building and allocation process concerns investor demand and distribution. Issuer, underwriter, counsel, auditors, investors, and regulators have distinct responsibilities. Questions can test which party performs an action, what information must be disclosed, or whether a step is permissible at a particular stage.

Offering materials and filings are important because the exam connects them to disclosure and timing. Learn the purpose of registration statements, prospectuses, offering memoranda, and other required documents at the level set out in the FINRA outline. Do not memorize document titles without understanding whether a transaction is registered or exempt and who receives the document. A distractor may state a real requirement but apply it to the wrong offering route.

Capital raising also involves pricing and dilution. Suppose a company has 40 million shares outstanding and sells 10 million new shares in an offering. After the issue, total shares are 50 million. A holder who kept 4 million shares goes from 10% ownership to 8%, before considering other changes. The offering may improve the company's cash position, but it reduces the percentage ownership of existing holders who do not buy additional shares.

Public versus private is not a simple choice between expensive and cheap. Public offerings can provide broad access and liquidity but bring registration, disclosure, and ongoing reporting considerations. Private offerings may limit the investor pool or impose resale restrictions, depending on the exemption and security. The facts about issuer status, purchaser qualifications, solicitation, and resale matter. A test answer should avoid sweeping assumptions that private securities have no disclosure obligations or that public registration removes every risk.

Function 3: M&A, tender offers and restructuring

Function 3 covers mergers and acquisitions, tender offers, and financial restructurings. M&A analysis can involve strategic rationale, valuation, transaction terms, consideration, financing, approvals, and execution risks. Consideration may be cash, stock, or a combination. In a stock-for-stock deal, exchange ratio determines how many acquirer shares a target holder receives for each target share. A premium calculation compares the offer price with the unaffected target share price.

For example, if a target traded at $20 before an offer of $25 per share, the offer premium is $5 divided by $20, or 25%. A common error divides the $5 premium by the offer price, producing 20%. State the reference price before calculating. If an offer is expressed as 0.5 acquirer shares per target share and the acquirer stock is worth $40, the stock consideration is $20 per target share before any changes in value or deal terms.

A tender offer is a direct offer to security holders under a regulated process. The outline includes tender offer terms, procedural protections, disclosure, and the parties involved. Distinguish a tender offer from a negotiated merger agreement. A scenario may focus on whether holders can withdraw tendered shares, how material changes are handled, or whether a competing bid affects the process. Apply the facts and rule timing given in the question rather than assuming every bid follows the same sequence.

Financial restructuring focuses on changing a company's capital structure or obligations. Debt may be exchanged, extended, repurchased, or converted; the company may negotiate with creditors or seek a court-supervised process. Priority and claim ranking matter. Equity holders usually sit behind creditors in the capital structure, but the exact recovery depends on enterprise value, claim amounts, collateral, and transaction terms. A restructuring item can test both the arithmetic of recoveries and the order in which claims are considered.

The three functions connect. Company analysis informs the recommendation to issue securities, sell an asset, acquire a competitor, or restructure debt. A valuation calculation can appear inside an M&A question; a securities-law issue can arise during an offering. Study by function first to learn the map, then practice mixed questions so you recognize the same concept when it appears in a different transaction context.

Due diligence and communication

Function 1 also tests the work that surrounds the spreadsheet. Investment bankers gather and verify financial and transaction information, identify missing or inconsistent data, coordinate with internal specialists, and communicate with clients and other departments. Due diligence is the process of examining information that supports a transaction or disclosure. A question may ask what to do when a source conflicts with a management statement. The safe analytical step is to investigate and reconcile the inconsistency, not to copy one number into the model without follow-up.

The outline references regulatory filings and communication controls. Candidates should understand that bankers coordinate with legal, compliance, research, syndicate, and capital-markets groups as their roles require. A tempting distractor may recommend using material nonpublic information or circulating unapproved marketing content. The role is to follow firm controls and applicable rules while obtaining information for a legitimate transaction purpose. The exam tests judgment about process as well as definitions.

Dilution and financing choices

When a company raises equity, existing owners' percentage may fall even if the company's total value rises. Suppose 100 shares are outstanding and a company issues 25 new shares. An investor who owns 10 shares falls from 10% ownership to 8% if the investor does not buy more: 10 divided by 125. The company receives new capital, but the investor's proportional claim is diluted. Questions may ask about ownership, per-share metrics, or the tradeoff between raising equity and adding debt.

Debt financing avoids issuing new shares at that moment but adds contractual payment obligations and may increase leverage. Preferred or convertible securities can combine features of debt and equity. A candidate should compare the cost, priority, control effects, dilution, and flexibility of each alternative using the facts given. A financially attractive option for existing shareholders may not be the best route for the issuer if it cannot service the resulting debt.

Tender offers and restructuring details

Tender-offer items can test the offer period, disclosures, treatment of holders, competing offers, and withdrawal rights. The first step is to identify that the bidder is making a direct offer to the target's security holders. Do not substitute the timeline for a negotiated merger or public stock issuance. The question may distinguish the bidder's obligation from the target's board or the shareholders' decision.

A restructuring analysis often begins with enterprise value and a list of claims. If a company is worth $120 million and has $80 million of senior debt and $60 million of junior debt, the value available after satisfying the senior claim is at most $40 million for junior claims, before costs and other claims. Common equity is behind both debt classes. The figures do not establish a real recovery without the full structure, but they show why priority and claim amount matter.

A financial restructuring can occur outside bankruptcy through exchange offers or negotiated changes, or within a court-supervised process. The correct answer depends on the transaction and legal facts given. Do not assume that every distressed company is insolvent, that every creditor has equal priority, or that a proposed exchange binds every holder in the same way. Read whether the item asks about economics, process, creditor priority, or a disclosure rule.

How to allocate study time

The weights are a sensible starting point for allocating practice, not a promise that every candidate should spend exactly 49%, 27%, and 24% of study time on the sections. A candidate with strong accounting and valuation may need less remedial time on Function 1 while still practicing it because it contributes 37 scored items. A candidate who has not studied securities offerings may need more than 27% of early learning time on Function 2.

Use two measures together: blueprint weight and personal error rate. If a fresh Function 1 set is already accurate and explanations are sound, preserve that strength with short reviews. If the 18-item M&A function contains repeated premium, exchange-ratio, and tender-offer mistakes, direct a focused block to those gaps. Reassess with new items rather than repeating the same set until you recognize the answers.

1. Learn basic statements, ratios, enterprise value, equity value, multiples, and dilution before advanced deal scenarios.
2. Build Function 2 knowledge around offering routes, participant roles, disclosure, registration, and allocation mechanics.
3. Study M&A and restructuring with transaction diagrams that show parties, consideration, claims, and sequence.
4. After the first pass, use mixed sets in proportions close to the published weights, then adjust for recurring errors.
5. Use a full timed mock to check whether calculations, legal reasoning, and reading speed work together.

Use the official outline as a map

The FINRA PDF is the authoritative topic map and includes the function weights, tasks, and underlying knowledge areas. It is not a teaching textbook. Use it as a checklist beside a course or reference: mark each knowledge area learned, practiced, and reviewed. When a study guide uses older four-section labels, translate the relevant subjects into the present three-function outline. Do not assume the PDF's copyright date or a provider's chapter list identifies the live exam version unless it matches the current FINRA outline.

Sources

FINRA Series 79 Content Outline (2025), including the function table and knowledge areas.