100+ Free CCM Debt Securities Practice Questions

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2026 Statistics

Key Facts: CCM Debt Securities Exam

70%

Passing Score

SEC Sri Lanka

90 mins

Exam Duration

50 MCQ items

365 days

T-Bill Yield Convention

CBSL standard

ACT/ACT

T-Bond Day Count

Market standard

2 Agencies

Active Rating Bodies

Fitch Lanka & LRA

Rs. 5,000

Examination Fee

CMET SEC

The SEC Sri Lanka Certificate in Debt Securities (CCM) exam requires a 70% passing score. It is a 50-question, 90-minute multiple choice exam. Successful completion is a prerequisite for becoming a Certified Debt Securities Advisor and Registered Investment Advisor in Sri Lanka.

Sample CCM Debt Securities Practice Questions

Try these sample questions to test your CCM Debt Securities exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following primary features distinguishes the money market from the capital market in Sri Lanka?

A.Money market instruments represent ownership in corporations, whereas capital market instruments represent debt obligations.

B.Money market instruments have a maturity of one year or less, whereas capital market instruments have maturities exceeding one year.

C.Money market transactions are regulated by the Securities and Exchange Commission (SEC), whereas capital markets are regulated by the Central Bank of Sri Lanka (CBSL).

D.Money market instruments carry higher default risk and interest rate risk than capital market instruments.

Explanation: The primary distinguishing feature between the money market and the capital market is maturity. Money market instruments (such as Treasury bills, commercial paper, and repurchase agreements) are short-term with maturities of one year or less, while capital market instruments (such as Treasury bonds and corporate debentures) are long-term with maturities exceeding one year.

2In the event of a corporate liquidation in Sri Lanka, which of the following describes the priority of claims for fixed income holders?

A.Fixed income holders have a lower priority of claim than common shareholders.

B.Fixed income holders have equal priority of claim with preferred shareholders.

C.Fixed income holders have a higher priority of claim than equity holders (both preferred and common shareholders).

D.Fixed income holders have their claims satisfied only after all administrative expenses and common equity claims are paid.

Explanation: Fixed income debt holders (such as debenture holders) are creditors of the corporation. As creditors, they have priority of claim over all equity holders (including preferred and common shareholders) on the assets of the company in the event of bankruptcy or liquidation.

3What is the 'par value' (also known as face value) of a debt security?

A.The principal amount that the issuer agrees to repay the bondholder at the maturity date.

B.The market price at which the bond is currently trading on the secondary market.

C.The total amount of interest payments that will be paid over the life of the bond.

D.The discount value at which the bond is originally auctioned by the Central Bank.

Explanation: The par value, or face value, is the nominal principal amount of the bond. It is the amount that the issuer promises to repay to the bondholder at the maturity date, and it is the base value upon which coupon interest payments are calculated.

4Which of the following defines the coupon rate of a bond?

A.The annualized rate of return earned by an investor who buys the bond at its current market price.

B.The nominal annual interest rate paid by the issuer to the bondholder, expressed as a percentage of par value.

C.The yield to maturity adjusted for the prevailing inflation rate in Sri Lanka.

D.The discount rate applied to determine the present value of the bond's maturity value.

Explanation: The coupon rate is the nominal interest rate that the bond issuer agrees to pay on the par value of the bond annually. For example, an 8% coupon bond with a par value of LKR 1,000 will pay LKR 80 of interest per year, regardless of its market price changes.

5Which statement accurately describes a zero-coupon bond?

A.It pays a variable coupon rate tied to the Sri Lanka Interbank Offered Rate (SLIBOR).

B.It pays interest coupon payments only if the issuer generates a profit during the financial year.

C.It is issued at par value and redeemed at a premium at maturity to compensate for the lack of coupons.

D.It is issued at a discount to its par value, makes no periodic coupon payments, and is redeemed at par at maturity.

Explanation: A zero-coupon bond does not make periodic interest payments. Instead, it is issued at a discount relative to its par value and is redeemed at its full par value at maturity. The investor's return is the difference between the discount purchase price and the redemption par value.

6What does a call provision (callable feature) in a bond contract allow the issuer to do?

A.Force the investor to convert the bond into common stock at a predetermined ratio.

B.Redeem the bond prior to its scheduled maturity date at a specified call price.

C.Extend the maturity of the bond if interest rates in the market rise.

D.Increase the coupon rate if the credit rating of the corporation is downgraded.

Explanation: A call provision gives the issuer the right, but not the obligation, to redeem (buy back) the bond prior to its scheduled maturity date. Issuers typically exercise this call option when interest rates decline, allowing them to refinance their debt at a lower borrowing cost.

7What right does a put provision (puttable feature) in a bond indenture grant to the bondholder?

A.The right to increase the coupon rate if inflation in Sri Lanka exceeds a specific limit.

B.The right to convert the bond into corporate debt of a parent company in Sri Lanka.

C.The right to sell the bond back to the issuer at a specified price (usually par) on designated dates before maturity.

D.The right to force the issuer to defer principal payments if the bondholder needs to delay tax liability.

Explanation: A put provision gives the bondholder (investor) the right to force the issuer to redeem the bond at a specified price (normally par value) on predetermined dates before the maturity date. This feature protects the investor against rising interest rates, as they can put the bond back and reinvest the proceeds at higher rates.

8Which of the following is a primary characteristic of a convertible bond?

A.It can be exchanged, at the option of the holder, for a specified number of common shares of the issuing corporation.

B.It can be converted from a local currency bond to a US Dollar-denominated sovereign bond.

C.It allows the issuer to switch the payment method from cash coupons to additional bonds (payment-in-kind).

D.It automatically converts from a fixed-rate bond to a floating-rate bond after a specific lockout period.

Explanation: A convertible bond is a hybrid security that gives the investor the option to convert the debt security into a predetermined number of common shares of the issuing company. Because of this embedded equity option, convertible bonds generally carry lower coupon rates than comparable non-convertible debt.

9Which of the following descriptions best defines interest rate risk in a fixed income context?

A.The risk that the issuer of a debt security will fail to make coupon payments on time.

B.The risk that the coupon payments will be reinvested at rates higher than the original yield to maturity.

C.The risk that a bond's market price will decline as a result of an increase in prevailing market interest rates.

D.The risk that high inflation will erode the real purchasing power of the bond's cash flows.

Explanation: Interest rate risk refers to the inverse relationship between interest rates and bond prices. When market interest rates rise, the present value of the bond's future cash flows decreases, causing the market price of the bond to fall.

10How does inflation risk (purchasing power risk) impact a fixed-rate bondholder in Sri Lanka?

A.It increases the likelihood that the issuer will call the bond before maturity.

B.It erodes the real value of the fixed coupon payments and the principal returned at maturity.

C.It causes the nominal price of the bond to rise in the secondary market.

D.It eliminates the reinvestment risk associated with periodic coupon cash flows.

Explanation: Inflation risk is the risk that the purchasing power of a bond's cash flows will decline due to inflation. Because the coupon payments and the principal repayment of a standard bond are fixed in nominal terms, rising inflation reduces the amount of real goods and services those cash flows can buy.

About the CCM Debt Securities Exam

Debt Securities asset-class module of the SEC Certificate in Capital Markets leading to Certified Debt Securities Advisor. Covers bond valuation, yield curves, credit ratings, and Sri Lankan debt instruments.

Questions

50 scored questions

Time Limit

1 hour 30 minutes

Passing Score

70%

Exam Fee

Rs. 5,000 (SEC Sri Lanka)

CCM Debt Securities Exam Content Outline

25%

Fixed Income Markets and Instruments

Structure of bond markets, participants, government and corporate debt instruments in Sri Lanka

35%

Bond Valuation and Analytics

Pricing mechanisms, yields (YTM, current yield), accrued interest, clean/dirty prices, duration, and convexity

20%

Yield Curves and Interest Rates

Term structure of interest rates, yield curve theories, sovereign benchmarks, and spot vs forward rates

20%

Credit Ratings and Risk Management

Credit risk assessment, rating agencies in Sri Lanka (Fitch Lanka, LRA), national scale ratings, and default analysis

How to Pass the CCM Debt Securities Exam

What You Need to Know

Passing score: 70%
Exam length: 50 questions
Time limit: 1 hour 30 minutes
Exam fee: Rs. 5,000

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CCM Debt Securities Study Tips from Top Performers

1Focus on Sri Lanka-specific market rules: the 365-day year day count convention for government debt, and the ACT/ACT convention for Treasury bonds.

2Understand the difference between the primary market (CBSL auctions to Primary Dealers) and the secondary market (inter-dealer and client trading).

3Practice calculations for clean and dirty bond prices, and know how to compute accrued interest.

4Master the three key term structure theories: Pure Expectations, Liquidity Preference, and Market Segmentation.

5Memorize the national credit rating scales, particularly the boundaries for investment grade (AAA down to BBB-) and speculative grade (BB+ down to D).

Frequently Asked Questions

What is the passing score for the SEC Sri Lanka Debt Securities exam?

The passing score is 70%. The exam consists of 50 multiple-choice questions, and you must answer at least 35 questions correctly within the 1 hour and 30 minutes time limit.

Who is eligible to take the SEC CCM Debt Securities module?

Candidates with G.C.E. Advanced Level (A/L) qualification (passes in all subjects) or higher academic/professional qualifications (CA Sri Lanka, CIMA, ACCA, SLIM, AAT, or relevant university degrees) can register for the CMET Capital Market program.

What is LankaSecure and is it tested on the exam?

Yes, LankaSecure is a major topic. It is the electronic registry and settlement system maintained by the Central Bank of Sri Lanka (CBSL) for scripless government securities (Treasury bills and bonds). The exam tests its components (SSSS and CDS) and operations.

Are there mathematical calculations on the exam?

Yes, the Debt Securities module has a significant quantitative component. You will be tested on pricing Treasury bills using the 365-day year convention, calculating bond coupon payments, accrued interest, current yield, Yield to Maturity (YTM), zero-coupon bond prices, and Modified/Macaulay duration.

Which credit rating agencies are recognized in Sri Lanka?

Fitch Ratings Lanka and Lanka Rating Agency (LRA) are the active domestic credit rating agencies registered and recognized in Sri Lanka. ICRA Lanka ceased operations in January 2023 and is no longer recognized.