I once met with a student that had a failed Series 79 exam…twice. What was unusual about this was that he had studied for months, and scored over 90% on his practice tests. Despite this, he was still having issues. A few minutes into our session I realized the issue…more on that later.
Below, I point out something that I see many students experience, and then some solutions.
Failed Series 79? How Could That Be With Such Great Practice Scores!?
If you are consistently getting 90% or higher on your practice questions, then that’s great! But, before patting yourself on the back, the first question to ask is: How many times have I done these questions? The most common issue that I run into with students that are doing well on the practice tests, but subsequently struggle when we go over specific examples, is that they have memorized the answers as opposed to thoroughly learn how to solve for them.
STC and Knopman have a large set of questions. It might sound like a lot, but you can zip through 1,000 practice questions in a month quite easily. Since the number of questions is limited, I would advise you study the curriculum first. If you get through all of the questions too early, then when you circle back through to really test your knowledge, you won’t be able to differentiate between whether you truly understand a concept, or have just memorized the question/answer. At that point, the only solution is to change your learning strategy. Get another resource for questions. Doing the same ones over and over won’t help much, in my experience.
Know Your Formulas Cold
Whether you need to calculate diluted earnings per share, straight-line depreciation expense, or enterprise value, the formulas are critical. Furthermore, math questions are “gimmes”. The math is rarely complicated. Thus, the answers are generally pretty cut and dry. Math is not up to interpretation (as some regulations can at times seem) and therefore sometimes easier to answer. The key is knowing the formula. Spend some time committing formulas to memory to avoid a failed Series 79 exam. With only 75 questions on the exam, you don’t need to know a lot. But if you can learn some simple calculations (which will also help you as an investment banker), then you can assure yourself a few extra points on the exam. That may be the difference between a pass and fail.
Take Your Time…If You Can
Many of my students are rushed into the exam. This is usually driven by their bosses, or a desire to get the exam “over with.” Don’t rush it. Take your time studying. A failed Series 79 exam is not good for you, or your boss. The Series 79 top-off is a challenging exam so don’t be surprised if it takes you more than a month to study. If you put in 8 to 10 hours per week, and 6 weeks of studying, then you can easily hit 60 hours of study time. This might even be on the low end of what you can achieve. The students I tutor that had already failed the Series 79 exam, often studied for well over 100 hours in total. Consider a little push back (diplomatically, of course!) with your boss if he/she demands too much with respect to the exam. The FINRA exams of 15 years ago were much different than today. As a result supervisors/bosses often dole out bad advice when it comes to these exams.
Overall, when it comes to the Series 79 Exam, don’t fall into the trap of memorizing your practice exams’ answers. Learn the content as best you can and study hard before you take the practice questions. You don’t want to end up like the student I described at the beginning of this writing. He had taken too many questions before really knowing the material, and hence knew all the answers when asked one way, but couldn’t answer variations of the same questions.
If this sounds like you, consider a Series 79 tutor to help broaden your ability to answer questions beyond your practice exams.
Series 79 Pass Rate: A Tough Metric to Pin Down
FINRA provides no detail on the Series 79 pass rate. Don’t even try to Google it, it’s not out there. Below I will try to give you a sneak peak into what it takes to pass the Series 79 exam. I’ll also share some anecdotal observations that we regularly see from our students.
Series 79 Pass Rate: First vs Second Attempt
As a Series 79 tutor, we see a lot of students for this exam. Similar to other FINRA exams for which we tutor, about half of our students seek us out after a failed first attempt. There is a major difference between the pass rate of those who first take the exam, as oppose to those on their second time around. The latter group has a much higher Series 79 pass rate (90%-plus in our experience). There are two obvious reasons for this.
First of all, the outcome of the second exam carries much more weight. The student’s job is often on the line (whether explicitly communicated or not), and there is significantly more pressure. Talk about motivation to study.
Second, after a failed Series 79, most people take the exam much more serious and study harder. This by itself is enough to boost most people’s score. Put more time in now, and get more free time later.
Is the Series 79 exam hard?
By far the hardest sections for most students is the analytical portion. There are a slew of calculations that need to be conquered.
For example, calculating diluted earnings per share (EPS) based off of the Treasury Method, analyzing the potential accretion or dilution that a merger may have on a companies earnings, and even simple (depending how much work you’ve done) things like calculating the dividend payout ratio.
In any event, there is no shortage of opportunities to use your calculator. This throws off a lot of people. In all our years of tutoring, I have seen many students freeze up when it comes to the math calculations. In fact, the number one request we get is for help on the analytical section. The rest of the exam includes memorizing rules, regulations, and procedures. Take some time to really study the analysis section. This section causes a lot of headaches for a lot of people. Not understanding the math and analysis section is the number one reason most students fail.
Pass Without a Class
Many of our students ask us whether we think a live-class is worthwhile…
There are a few companies out there that offer multi-day, and multi-hour live classes for the Series 79. Knopman Marks is one of these companies. While their curriculum is great, feedback from my students is that the live classes can be a mixed bag (not just with Knopman, but any provider actually). The biggest drawback to these classes is that they are very one-way. Time for questions is non-existent so your best bet is to write down all you can as the instructor speeds through content. If you want specific questions answered, the class is not where that will happen.
Furthermore, if you are the type of person that will zone out after the first 15 minutes, these classes are also not for you. One-on-one attention will keep you more engaged and focused. If you can’t afford a Series 79 tutor, or don’t have the time, then just try the content on your own. You can probably get through a lot of it yourself once you buckle down and take some time to focus.
All in all, most investment bankers come to us with Knopman’s study material. I personally highly recommend it. Knopman sufficiently preps you for your exam, and if you can score 80%+ on their practice exams, you are typically good-to-go. For most of you, their material will be all you need. If you really want to cut down on your study time however, then consider a tutor, and contact us. We have a very high success rate and with a little work you’ll get there!
Best Series 79 Tutors: Where to Find Them
Speaking of tutors…
For years, I tutored mostly CFA candidates and Series 7 hopefuls. This past year however, I had a student approach me asking for my help with the Series 79. Fortunately there is considerable overlap with the CFA exam, and I could help. Although the Series 79 is taken by thousands of individuals, there is a dearth of tutors on the subject.
The following is meant to explore where you can find competent Series 79 tutors.
Where to Find the Best Series 79 Tutors
In terms of geography, New York City is the obvious answer. You’ll find the most investment bankers in the country concentrated here in New York City. So, reasonably enough, it’s also where many of the best Series 79 tutors happen to be. There are a number of tutors on the tutor consolidator, Wyzant, that can help you, but a Series 79 tutor is more rare to find than, say, a Series 7 tutor, or CFA tutor. That said, I know of a few folks that specialize in the topic.
Which Series 79 Tutor Do I Choose?
First, of course, is yours truly. I sincerely believe that the services we offer at Professional Exam Tutoring are some of the best (if not, THE best) in the city. Our team of tutors have a rare combination of real-world experience and academic know-how.
The team includes a fund manager that actively tutors, a mix of tutors from the buy-side, sell-side, and financial advisors, with most of them credentialed with graduate degrees, and many CFA Charterholders. Thus we can offer a slew of practical real-world skills that can be translated into the theoretical jargon via simple and digestible examples to help you gain the knowledge needed to pass the exam.
Professional Exam Tutoring is known and reviewed (check out our Google Reviews too) by those that have used our services for the SIE Exam, Series 7 Top-Off Exam, Series 86 Exam, Series 63, Series 6, CFA exams, and importantly, for the Series 79 Exam.
Next, I would be remiss if I didn’t mention a friend of mine over at Capital Advantage Tutoring. Ken Finnen has been a tutor for years, and has years of experience as a compliance officer. Working on Wall Street since the late 1980s, Ken has a broad depth of real-world experience combined with textbook know-how. If you’re looking for someone with a solid grasp on the rules and regulations Ken is your man. He comes highly reviewed, and can be found on a number of sites (including Wyzant).
What Else Can You Do?
You can give yourself the best possible chance by taking the advice given in this Series 79 guide as well as our other informative posts on the subject. It is vital to be prepared properly and that is down to you. However, at Professional Exam Tutoring, our tutors can give you that extra edge and help you focus, to achieve the result you want.
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Frequently Asked Questions (FAQ)
Where should I start my studying for the Series 79?
If you don't already have the necessary formulas memorized, you should start there. The Series 79 Exam includes a lot of analytical questions. These questions often require that you know the associated formulas. Attempting practice questions without knowing the formulas is like trying to figure out your way on an unmarked map. Many of the curriculum providers offer have formula sheets that can be quite helpful. Check with the Series 79 study material that you received from your employer. Both STC and Knopman are great resources for the Series 79. Doing a once-over of their material before you dive into questions is highly recommended. After you have a general understanding of the material, make sure to memorize the needed formulas, and you'll be ready to start studying effectively!
How does the Series 79 Exam compare to the SIE Exam?
The Series 79 Exam is definitely are harder exam than the SIE Exam. The SIE Exam is meant to be a more introductory exam to ensure that you're familiar with high level concepts. The Series 79 Exam is geared much more toward those in jobs where a little more analysis is required. The large majority of questions tested on the SIE Exam will not involve calculations, while a significant portion on the Series 79 Exam will. Make sure you are comfortable with using the assigned calculator (usually one with fairly basic functions). The math is not often complicated but it may involve various steps. The calculations involving mergers and acquisitions are usually the most involved mathematically. Overall, the Series 79 Exam is definitely more challenging than the SIE Exam, but with a month or two of studying the average student should successfully conquer it.
Can I take the Series 79 Exam before the SIE Exam?
The short answer is, yes. Whether it's a good idea or not, is debatable. Most students that I tutor for the Series 79 have some kind of background in finance. However, some of the material on which you get tested for the SIE Exam and the Series 79 are not tested in a standard corporate finance course in college. The SEC Act of 1933 and 1934 for instance, are rarely covered in detail at most schools. The SIE Exam is a nice introduction to the world of finance as practiced on Wall Street. It may benefit you to start out with the easy material first (the SIE is typically easier than the Series 79 for most students). Give yourself a confidence boost, and earn some goodwill with your bosses by passing the first FINRA exam you take. Although most people pass the Series 79, it's much more likely that you'll pass the SIE Exam than the Series 79 - the SIE Exam difficulty level is lower than the Series 79. Starting out with the harder one first just adds needless stress. We recommend you start with the SIE Exam.
What are the Most Common Mistakes Test Takers Make on the Series 79 Exam?
There are a few key topics that trip up the most people:
- Stock based acquisitions
- Comparable valuations (using EV/EBITDA, EV/Sales, P/E multiples)
- Calculating Diluted EPS using Treasury Method
- Calculating Accretion/Dilution of EPS after a merger/acquisition
- Calculating the WACC
- Calculating the required rate of return
- Enterprise Value (solving for other components of Enterprise Value)
The analytics portion of the exam is by far the hardest. Spend some time honing your skills on these types of questions. Repetition and practice are the only solutions. Unfortunately, there are not short cuts. As mentioned above, Knopman has a bounty of practice questions that should help you in this area. Make sure to practice the analytical questions with exhibits as well. They are commonly used on the exam.
Do I Need to Know Accounting for the Series 79 Exam?
Well, you don't need an advanced degree in accounting, but knowing the basics will certainly help. For example, we highly recommend that you memorize the line items of a typical income statement, balance sheet, and cash flow. You might get away with not knowing the cash flow statement too in depth, but the basics of the income statement and balance sheet will make things a heck of a lot easier. What we recommend for our students is to take the same approach an elementary school teacher might. Specifically, write out the line items of the income statement and balance sheet 5 to 10 times each. You don't need to know each line item too in-depth, but knowing where they fall on the income statement (what order), is most important. For example, you should know that operating income (EBIT) comes before interest expense so you know how to calculate EBITDA. It is also important to know that preferred dividends get subtracted out of income AFTER taxes have been removed. All of these little things will make sure you can make your way through necessary ratios and calculations on the exam.