Malaysia Capital Markets SC SIDC Exam Questions and Answers
Question 1. A one-period project requires an initial outlay of RM120,000.00 and is expected to pay RM160,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. RM-25,454.55
B. RM56,000.00
C. RM40,000.00
D. RM25,454.55
Correct Answer: D. RM25,454.55
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting RM160,000.00 for one year at
10.0% and subtracting RM120,000.00 gives RM25,454.55. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 2. A company earns net income of 12 million and has average common equity of 90 million. What is
return on equity?
A. 7.50%
B. 12.00%
C. 13.33%
D. 86.67%
Correct Answer: C. 13.33%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 13.33%. The measure should not be inverted because equity divided by income answers a
different question.
Question 3. An investor buys a put with strike RM75.00 for a premium of RM5.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. RM75.00
B. RM5.00
C. RM70.00
D. RM80.00
Correct Answer: C. RM70.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or RM75.00 - RM5.00 = RM70.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 4. A share trades at RM30.00 and pays annual cash dividends of RM4.00 per share. What is the dividend
yield based on the current price?
A. 86.67%
B. 13.33%
C. 4.00%
D. 7.50%
Correct Answer: B. 13.33%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. RM4.00 / RM30.00 ×
100 = 13.33%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Page 1
,Question 5. An investor buys a call with strike RM100.00 for a premium of RM9.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. RM9.00
B. RM109.00
C. RM100.00
D. RM91.00
Correct Answer: B. RM109.00
Explanation: A long call breaks even at expiration when intrinsic value exactly offsets the premium paid. Therefore the breakeven
is strike plus premium, or RM100.00 + RM9.00 = RM109.00. Below this level the position has a net loss at expiration, while above it
the position has a net profit.
Question 6. A RM10,000.00 face-value bond pays a 4.5% annual coupon in 4 equal payment(s) per year. What is
each coupon payment?
A. RM450.00
B. RM2,500.00
C. RM225.00
D. RM112.50
Correct Answer: D. RM112.50
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals RM450.00. Dividing that
amount by 4 payment period(s) gives RM112.50 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 7. Which of the following best describes Liquidity risk?
A. The risk that rising prices reduce the real purchasing power of investment returns or cash flows.
B. The risk that one party delivers cash or securities but does not receive the corresponding consideration.
C. The risk that a borrower or counterparty will fail to meet contractual obligations.
D. The risk that an asset cannot be sold quickly at a reasonable price or obligations cannot be met when due.
Correct Answer: D. The risk that an asset cannot be sold quickly at a reasonable price or obligations cannot be met when
due.
Explanation: Liquidity risk is best understood as the risk that an asset cannot be sold quickly at a reasonable price or obligations
cannot be met when due. This interpretation is consistent with the way the concept is applied in professional securities and
investment practice, including activity overseen by Securities Commission Malaysia (SC). The other choices describe different
concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 8. A candidate preparing for Malaysia Capital Markets Exams (SC/SIDC) encounters the following
description: “Safekeeping and administration of financial assets on behalf of clients.” Which term is most directly
associated with this description?
A. Client-asset segregation
B. Recordkeeping
C. Custody
D. Corporate action
Correct Answer: C. Custody
Explanation: Custody is best understood as safekeeping and administration of financial assets on behalf of clients. This
interpretation is consistent with the way the concept is applied in professional securities and investment practice, including activity
overseen by Securities Commission Malaysia (SC). The other choices describe different concepts or would lead to a materially
different risk, trading, valuation, or compliance conclusion.
Page 2
,Question 9. A portfolio invests 35% in Asset A, which returns 8.0%, and the remainder in Asset B, which returns
7.0%. What is the portfolio return?
A. 1.00%
B. 7.35%
C. 7.65%
D. 7.50%
Correct Answer: B. 7.35%
Explanation: A portfolio return is the weighted average of the component returns using portfolio weights. The calculation is (0.35 ×
8.0%) + (0.65 × 7.0%) = 7.35%. A simple average is appropriate only when the positions have equal weights.
Question 10. In the context of Bursa Malaysia capital markets, which statement about Duration is most accurate?
A. A measure of a fixed-income instrument's sensitivity to changes in yield, subject to the assumptions of the duration measure
used.
B. A bond that allows the investor to require early redemption under specified terms.
C. Annual coupon interest divided by the bond's current market price.
D. A bond that makes periodic interest payments and repays principal according to its terms.
Correct Answer: A. A measure of a fixed-income instrument's sensitivity to changes in yield, subject to the assumptions
of the duration measure used.
Explanation: Duration is best understood as a measure of a fixed-income instrument's sensitivity to changes in yield, subject to the
assumptions of the duration measure used. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Securities Commission Malaysia (SC). The other choices describe
different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 11. A company earns net income of 15 million and has average common equity of 90 million. What is
return on equity?
A. 15.00%
B. 83.33%
C. 16.67%
D. 6.00%
Correct Answer: C. 16.67%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 16.67%. The measure should not be inverted because equity divided by income answers a
different question.
Question 12. A pooled fund reports assets of RM90,000,000.00, liabilities of RM8,000,000.00, and 5 million units
outstanding. What is the fund's NAV per unit?
A. RM16.40
B. RM1.60
C. RM18.00
D. RM19.60
Correct Answer: A. RM16.40
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
RM82,000,000.00, which produces an NAV per unit of RM16.40. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Page 3
, Question 13. A leveraged account has securities worth RM100,000.00 and a debit or financing balance of
RM55,000.00. What is the account equity as a percentage of market value?
A. 81.82%
B. 222.22%
C. 45.00%
D. 55.00%
Correct Answer: C. 45.00%
Explanation: Account equity is market value minus the financing balance. Equity is RM45,000.00, and RM45,000.00 /
RM100,000.00 = 45.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for
account equity.
Question 14. Currency A is quoted at 0.7258 units of Currency B per A, and Currency B is quoted at 132.94 units of
Currency C per B. What is the implied Currency C per Currency A cross rate?
A. 183.16 units of Currency C per Currency A
B. 133.66 units of Currency C per Currency A
C. 96.49 units of Currency C per Currency A
D. 0.0055 units of Currency C per Currency A
Correct Answer: C. 96.49 units of Currency C per Currency A
Explanation: When the quotation units align, multiply the two exchange rates so that Currency B cancels. 0.7258 B/A × 132.94 C/B
= 96.49 C/A. Dividing instead of multiplying would leave the unit conversion inconsistent with the requested quotation.
Question 15. A portfolio returned 8.0%, the risk-free rate was 1.0%, and portfolio volatility was 5.0%. What was the
Sharpe ratio?
A. 0.71
B. 1.60
C. 1.40
D. 7.00
Correct Answer: C. 1.40
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (8.0% -
1.0%) / 5.0% = 1.40. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 16. A candidate preparing for Malaysia Capital Markets Exams (SC/SIDC) encounters the following
description: “A measure of an asset's sensitivity to movements in a specified market benchmark.” Which term is
most directly associated with this description?
A. Correlation
B. Beta
C. Rebalancing
D. Diversification
Correct Answer: B. Beta
Explanation: Beta is best understood as a measure of an asset's sensitivity to movements in a specified market benchmark. This
interpretation is consistent with the way the concept is applied in professional securities and investment practice, including activity
overseen by Securities Commission Malaysia (SC). The other choices describe different concepts or would lead to a materially
different risk, trading, valuation, or compliance conclusion.
Page 4
Question 1. A one-period project requires an initial outlay of RM120,000.00 and is expected to pay RM160,000.00
one year later. At a discount rate of 10.0%, what is the NPV?
A. RM-25,454.55
B. RM56,000.00
C. RM40,000.00
D. RM25,454.55
Correct Answer: D. RM25,454.55
Explanation: NPV equals the present value of future cash flows minus the initial outlay. Discounting RM160,000.00 for one year at
10.0% and subtracting RM120,000.00 gives RM25,454.55. The undiscounted difference ignores the time value of money and
therefore is not NPV.
Question 2. A company earns net income of 12 million and has average common equity of 90 million. What is
return on equity?
A. 7.50%
B. 12.00%
C. 13.33%
D. 86.67%
Correct Answer: C. 13.33%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 13.33%. The measure should not be inverted because equity divided by income answers a
different question.
Question 3. An investor buys a put with strike RM75.00 for a premium of RM5.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. RM75.00
B. RM5.00
C. RM70.00
D. RM80.00
Correct Answer: C. RM70.00
Explanation: A long put breaks even at expiration when the put's intrinsic value equals the premium paid. The breakeven is strike
minus premium, or RM75.00 - RM5.00 = RM70.00. A lower underlying price increases the long put's expiration profit after the
breakeven is crossed.
Question 4. A share trades at RM30.00 and pays annual cash dividends of RM4.00 per share. What is the dividend
yield based on the current price?
A. 86.67%
B. 13.33%
C. 4.00%
D. 7.50%
Correct Answer: B. 13.33%
Explanation: Dividend yield equals annual cash dividend per share divided by current market price per share. RM4.00 / RM30.00 ×
100 = 13.33%. The calculation does not include capital gains or losses, so it is not a total-return measure.
Page 1
,Question 5. An investor buys a call with strike RM100.00 for a premium of RM9.00 per unit. Ignoring transaction
costs, what is the breakeven underlying price at expiration?
A. RM9.00
B. RM109.00
C. RM100.00
D. RM91.00
Correct Answer: B. RM109.00
Explanation: A long call breaks even at expiration when intrinsic value exactly offsets the premium paid. Therefore the breakeven
is strike plus premium, or RM100.00 + RM9.00 = RM109.00. Below this level the position has a net loss at expiration, while above it
the position has a net profit.
Question 6. A RM10,000.00 face-value bond pays a 4.5% annual coupon in 4 equal payment(s) per year. What is
each coupon payment?
A. RM450.00
B. RM2,500.00
C. RM225.00
D. RM112.50
Correct Answer: D. RM112.50
Explanation: Annual coupon interest is face value multiplied by the annual coupon rate, which equals RM450.00. Dividing that
amount by 4 payment period(s) gives RM112.50 per payment. The bond's market price is irrelevant to the contractual coupon cash
flow unless the question specifically asks for a yield measure.
Question 7. Which of the following best describes Liquidity risk?
A. The risk that rising prices reduce the real purchasing power of investment returns or cash flows.
B. The risk that one party delivers cash or securities but does not receive the corresponding consideration.
C. The risk that a borrower or counterparty will fail to meet contractual obligations.
D. The risk that an asset cannot be sold quickly at a reasonable price or obligations cannot be met when due.
Correct Answer: D. The risk that an asset cannot be sold quickly at a reasonable price or obligations cannot be met when
due.
Explanation: Liquidity risk is best understood as the risk that an asset cannot be sold quickly at a reasonable price or obligations
cannot be met when due. This interpretation is consistent with the way the concept is applied in professional securities and
investment practice, including activity overseen by Securities Commission Malaysia (SC). The other choices describe different
concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 8. A candidate preparing for Malaysia Capital Markets Exams (SC/SIDC) encounters the following
description: “Safekeeping and administration of financial assets on behalf of clients.” Which term is most directly
associated with this description?
A. Client-asset segregation
B. Recordkeeping
C. Custody
D. Corporate action
Correct Answer: C. Custody
Explanation: Custody is best understood as safekeeping and administration of financial assets on behalf of clients. This
interpretation is consistent with the way the concept is applied in professional securities and investment practice, including activity
overseen by Securities Commission Malaysia (SC). The other choices describe different concepts or would lead to a materially
different risk, trading, valuation, or compliance conclusion.
Page 2
,Question 9. A portfolio invests 35% in Asset A, which returns 8.0%, and the remainder in Asset B, which returns
7.0%. What is the portfolio return?
A. 1.00%
B. 7.35%
C. 7.65%
D. 7.50%
Correct Answer: B. 7.35%
Explanation: A portfolio return is the weighted average of the component returns using portfolio weights. The calculation is (0.35 ×
8.0%) + (0.65 × 7.0%) = 7.35%. A simple average is appropriate only when the positions have equal weights.
Question 10. In the context of Bursa Malaysia capital markets, which statement about Duration is most accurate?
A. A measure of a fixed-income instrument's sensitivity to changes in yield, subject to the assumptions of the duration measure
used.
B. A bond that allows the investor to require early redemption under specified terms.
C. Annual coupon interest divided by the bond's current market price.
D. A bond that makes periodic interest payments and repays principal according to its terms.
Correct Answer: A. A measure of a fixed-income instrument's sensitivity to changes in yield, subject to the assumptions
of the duration measure used.
Explanation: Duration is best understood as a measure of a fixed-income instrument's sensitivity to changes in yield, subject to the
assumptions of the duration measure used. This interpretation is consistent with the way the concept is applied in professional
securities and investment practice, including activity overseen by Securities Commission Malaysia (SC). The other choices describe
different concepts or would lead to a materially different risk, trading, valuation, or compliance conclusion.
Question 11. A company earns net income of 15 million and has average common equity of 90 million. What is
return on equity?
A. 15.00%
B. 83.33%
C. 16.67%
D. 6.00%
Correct Answer: C. 16.67%
Explanation: Return on equity compares earnings available to common equity with the equity capital supporting those earnings.
Using the stated figures, × 100 = 16.67%. The measure should not be inverted because equity divided by income answers a
different question.
Question 12. A pooled fund reports assets of RM90,000,000.00, liabilities of RM8,000,000.00, and 5 million units
outstanding. What is the fund's NAV per unit?
A. RM16.40
B. RM1.60
C. RM18.00
D. RM19.60
Correct Answer: A. RM16.40
Explanation: Net asset value equals assets minus liabilities, divided by units outstanding. Here the net assets are
RM82,000,000.00, which produces an NAV per unit of RM16.40. Using gross assets would overstate value because fund liabilities
belong in the NAV calculation.
Page 3
, Question 13. A leveraged account has securities worth RM100,000.00 and a debit or financing balance of
RM55,000.00. What is the account equity as a percentage of market value?
A. 81.82%
B. 222.22%
C. 45.00%
D. 55.00%
Correct Answer: C. 45.00%
Explanation: Account equity is market value minus the financing balance. Equity is RM45,000.00, and RM45,000.00 /
RM100,000.00 = 45.00%. The financing percentage is the complement of the equity percentage and should not be mistaken for
account equity.
Question 14. Currency A is quoted at 0.7258 units of Currency B per A, and Currency B is quoted at 132.94 units of
Currency C per B. What is the implied Currency C per Currency A cross rate?
A. 183.16 units of Currency C per Currency A
B. 133.66 units of Currency C per Currency A
C. 96.49 units of Currency C per Currency A
D. 0.0055 units of Currency C per Currency A
Correct Answer: C. 96.49 units of Currency C per Currency A
Explanation: When the quotation units align, multiply the two exchange rates so that Currency B cancels. 0.7258 B/A × 132.94 C/B
= 96.49 C/A. Dividing instead of multiplying would leave the unit conversion inconsistent with the requested quotation.
Question 15. A portfolio returned 8.0%, the risk-free rate was 1.0%, and portfolio volatility was 5.0%. What was the
Sharpe ratio?
A. 0.71
B. 1.60
C. 1.40
D. 7.00
Correct Answer: C. 1.40
Explanation: The Sharpe ratio is excess return over the risk-free rate divided by return volatility. Using the figures given, (8.0% -
1.0%) / 5.0% = 1.40. It is a unitless risk-adjusted performance measure, so the volatility belongs in the denominator.
Question 16. A candidate preparing for Malaysia Capital Markets Exams (SC/SIDC) encounters the following
description: “A measure of an asset's sensitivity to movements in a specified market benchmark.” Which term is
most directly associated with this description?
A. Correlation
B. Beta
C. Rebalancing
D. Diversification
Correct Answer: B. Beta
Explanation: Beta is best understood as a measure of an asset's sensitivity to movements in a specified market benchmark. This
interpretation is consistent with the way the concept is applied in professional securities and investment practice, including activity
overseen by Securities Commission Malaysia (SC). The other choices describe different concepts or would lead to a materially
different risk, trading, valuation, or compliance conclusion.
Page 4
