Embedded power regulators, such as low dropout regulators (LDOs), are generally tested for DC behavior and are rarely characterized dynamically. However, LDO loop dynamics play an important role in the overall behavior of the system. Dynamic characterization of LDOs based directly on LDO specifications requires measurement of output transient response with a step input at various points in the circuit. Such characterization is both difficult and costly. Alternatively, LDOs can be characterized by measuring loop dynamics in the form of a transfer function. Since the system is highly non-linear, transfer function can be characterized around a given operating point in terms of poles and zeros. The stability of the system can be inferred from the loop transfer function. This indirect characterization is more feasible but may result in test escapes. In this paper, we investigate the dynamic LDO characterization by closed loop transfer function and evaluate the test coverage with respect to modeled faults in the circuit. We show that faults that are not detectable with DC tests only become detectable with dynamic testing. We also show that the majority of undetectable faults are redundant with regards to the overall operation in terms of step response.