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100+ Free SIDC Module 18 Practice Questions

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Key Facts: SIDC Module 18 Exam

100 questions

Module 18 has 100 multiple-choice questions

SIDC SC Licensing Examination Terms & Conditions

150 minutes

Time allocated to complete the SIDC Module 18 exam

SIDC SC Licensing Examination Terms & Conditions

70%

Passing mark required to pass Module 18

SIDC SC Licensing Examination Terms & Conditions

RM1,250

Examination registration fee per sitting

SIDC SC Licensing Examination Terms & Conditions

Dual-Activity

Covers both dealing in securities and dealing in derivatives

SC Licensing Handbook

Level 2

Assesses analytical knowledge and market application

SIDC Licensing Examinations

100

Free original practice questions in this bank

OpenExamPrep

SC Licensing Examination Module 18 - Securities and Derivatives Trading: Products and Analysis is a Level 2 professional licensing exam administered by SIDC for the Securities Commission Malaysia. It consists of 100 multiple-choice questions to be completed in 150 minutes, with a passing mark of 70%. The current SIDC exam fee is RM1,250 per sitting. Passing Module 18 is required, typically in conjunction with Module 17, to apply for a Capital Markets Services Representative's Licence (CMSRL) to deal in both securities and derivatives in Malaysia. This 100-question bank provides original practice on equities, bonds, futures, options, technical analysis, and portfolio risk management.

Sample SIDC Module 18 Practice Questions

Try these sample questions to test your SIDC Module 18 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A company recently paid a dividend of RM0.20 per share. Dividends are expected to grow at a constant rate of 6% indefinitely. If the required rate of return on the stock is 10%, what is the intrinsic value of the stock using the Gordon Growth Model?
A.RM5.00
B.RM5.30
C.RM2.00
D.RM4.00
Explanation: Under the Gordon Growth Model, the intrinsic value is P_0 = D_1 / (k - g). Here, D_0 = RM0.20, g = 6%, and k = 10%. D_1 = D_0 * (1 + g) = RM0.20 * 1.06 = RM0.212. Thus, P_0 = RM0.212 / (0.10 - 0.06) = RM0.212 / 0.04 = RM5.30.
2A multi-stage dividend discount model is most appropriate for valuing a company that is:
A.In a mature phase with stable, predictable dividend growth
B.Experiencing high short-term growth followed by a transition to a stable long-term growth rate
C.Currently paying no dividends and has no plans to pay dividends in the foreseeable future
D.In decline with negative growth rates that are expected to remain constant
Explanation: A multi-stage DDM allows for varying growth rates over different stages. It is ideal for companies experiencing temporary high-growth periods (e.g., due to a new product or market expansion) before maturing to a stable, long-term growth rate.
3An analyst is evaluating two companies in the same industry. Company A has a P/E ratio of 12x, while Company B has a P/E ratio of 24x. Which of the following is the most plausible explanation for this difference?
A.Company A is expected to have much higher earnings growth in the future than Company B
B.Company B is perceived by the market to have higher growth prospects or lower risk than Company A
C.Company A has a much higher dividend payout ratio than Company B, driving its price down
D.Company B is undervalued relative to Company A, suggesting a buying opportunity
Explanation: A higher P/E ratio indicates that investors are willing to pay more per unit of current earnings, usually because they expect higher earnings growth in the future or perceive the company to have lower risk (lower required rate of return).
4The Price-to-Book (P/B) ratio is most suitable and widely used for valuing companies in which of the following sectors?
A.Technology and software development
B.Financial services and banking
C.Pharmaceuticals and biotechnology
D.Consumer discretionary and retail
Explanation: The P/B ratio is highly suitable for financial institutions like banks and insurance companies, as their assets (mostly financial instruments) are liquid and regularly marked-to-market. Consequently, book value closely reflects fair market value.
5Why is the EV/EBITDA multiple often preferred over the P/E ratio when comparing companies with different levels of financial leverage?
A.EV/EBITDA is unaffected by depreciation and amortisation, which are non-cash expenses
B.EV/EBITDA is capital-structure neutral, as Enterprise Value includes debt and EBITDA is calculated before interest expense
C.EBITDA is always larger than net income, reducing the volatility of the multiple
D.EV/EBITDA is more widely accepted under Malaysian Financial Reporting Standards (MFRS)
Explanation: Because Enterprise Value (EV) measures the value of the entire business (to both debt and equity holders) and EBITDA is operating profit before interest expense, the multiple is capital-structure neutral. This allows for cleaner comparisons between firms with different debt ratios.
6Which of the following characteristics best describes preference shares compared to ordinary shares?
A.Preference shares carry higher voting rights than ordinary shares in all corporate matters
B.Preference shares have a prior claim on corporate assets and receive fixed dividends before ordinary shareholders
C.Preference shares exhibit higher capital appreciation potential than ordinary shares
D.Preference dividends are tax-deductible expenses for the issuing company, unlike ordinary dividends
Explanation: Preference shares are hybrid instruments. They represent equity but act like debt by paying a fixed dividend. In the event of liquidation, preference shareholders have a senior claim on assets over ordinary shareholders.
7What is a key structural difference between corporate warrants and exchange-traded options?
A.Warrants are issued directly by the corporation itself, whereas options are created by investors and traded on an exchange
B.Warrants are always cash-settled, whereas options always require physical delivery of the underlying shares
C.Options have much longer maturities (often 3 to 5 years) compared to warrants
D.Warrants do not have a strike price, whereas options always do
Explanation: Warrants are equity derivatives issued directly by the company, meaning when they are exercised, the company issues new shares, resulting in dilution. Exchange-traded options are contracts between market participants and do not involve the underlying company.
8When a holder exercises a corporate warrant, the cash flow and capital structure impact on the issuing corporation is:
A.An outflow of cash and a decrease in the number of ordinary shares outstanding
B.An inflow of cash and an increase in the number of ordinary shares outstanding
C.No cash flow impact, but a conversion of debt to equity on the balance sheet
D.An inflow of cash accompanied by an increase in the company's long-term debt liabilities
Explanation: Exercising a warrant requires the holder to pay the strike price to the corporation in cash. The company then issues new ordinary shares to the holder, which increases the cash balance and the total outstanding shares, diluting existing shareholders.
9Which mechanism ensures that the market trading price of an Exchange-Traded Fund (ETF) remains close to its Net Asset Value (NAV)?
A.Daily price limit intervention by Bursa Malaysia
B.The creation and redemption process executed by Authorised Participants (APs)
C.Mandatory quarterly dividend payouts by the ETF manager
D.The automatic rebalancing of the underlying index by the index provider
Explanation: Authorised Participants (APs) can arbitrage price discrepancies between the ETF trading price and its NAV. If the ETF trades at a premium, APs buy the underlying shares, exchange them for new ETF units, and sell them. If it trades at a discount, they do the reverse.
10A company in a mature but declining industry is expected to pay a dividend of RM0.50 next year. The dividend is projected to decrease by 4% per year indefinitely. If the required rate of return is 12%, what is the value of the stock?
A.RM3.125
B.RM4.17
C.RM6.25
D.RM12.50
Explanation: Using the Gordon Growth Model with a negative growth rate: P_0 = D_1 / (k - g). Here, D_1 = RM0.50, k = 12%, and g = -4%. Therefore, P_0 = RM0.50 / [0.12 - (-0.04)] = RM0.50 / 0.16 = RM3.125.

About the SIDC Module 18 Exam

SC Licensing Examination Module 18 - Securities and Derivatives Trading: Products and Analysis is a comprehensive assessment designed for individuals seeking to apply for a Capital Markets Services Representative’s Licence (CMSRL) to carry on the regulated activities of dealing in securities and dealing in derivatives. The examination tests a candidate's understanding of financial market products, analysis, valuation, trading strategies, and risk management in the Malaysian capital market. The syllabus covers equity products (ordinary and preference shares, warrants, ETFs); fixed income and money market instruments (bonds, sukuk, yields, duration); derivatives products (exchange-traded futures like FKLI and FCPO, options, structured warrants, index derivatives, and over-the-counter derivatives); technical analysis (charts, trends, indicators) and fundamental analysis (financial ratios, macroeconomic drivers); trading strategies (hedging, spreads, arbitrage); and risk and portfolio applications (CAPM, diversification, risk-adjusted returns). The examination is administered by the Securities Industry Development Corporation (SIDC) on behalf of the Securities Commission Malaysia.

Assessment

100 multiple-choice questions, each with four options and one correct answer. As a Level 2 examination, it tests both recall and the application of concepts to market situations.

Time Limit

150 minutes for the 100 multiple-choice questions.

Passing Score

70% (a candidate must answer at least 70 of the 100 questions correctly).

Exam Fee

RM1,250 per sitting (first sitting and re-sitting) under the current SIDC examination terms and conditions; fees are set by the SIDC and subject to change. (Securities Industry Development Corporation (SIDC), the training and development arm of the Securities Commission Malaysia)

SIDC Module 18 Exam Content Outline

20%

Equity Products and Analysis

Characteristics of ordinary shares, preference shares, warrants, and ETFs; dividend discount models (constant growth and multi-stage DDM); pricing multiples (P/E, P/B, P/S, EV/EBITDA); and the analysis of equity value.

20%

Fixed Income and Money Markets

Bonds, sukuk, and money market instruments; bond pricing, yield to maturity (YTM), current yield, accrued interest; term structure of interest rates; and risk measures including Macaulay duration, modified duration, and convexity.

20%

Derivatives Products

Exchange-traded futures and options; contract specifications of BMD contracts including FBM KLCI Futures (FKLI) and Crude Palm Oil Futures (FCPO); structured warrants; index derivatives; and the market for over-the-counter (OTC) derivatives.

15%

Technical and Fundamental Analysis

Fundamental analysis involving financial statement analysis, ratio analysis (liquidity, leverage, profitability, efficiency), DuPont framework, and industry analysis; technical analysis involving chart patterns, trendlines, support and resistance, and indicators such as RSI, MACD, and moving averages.

15%

Trading Strategies

Equity market strategies; hedging price risk using futures and options; spread trading (calendar and inter-commodity spreads); arbitrage (cash-and-carry); option strategies (straddles, spreads); and portfolio rebalancing.

10%

Risk and Portfolio Applications

Modern portfolio theory, diversification, and Capital Asset Pricing Model (CAPM); calculating portfolio risk and expected return; risk-adjusted performance measures (Sharpe and Treynor ratios); and managing market, credit, liquidity, and operational risks.

How to Pass the SIDC Module 18 Exam

What You Need to Know

  • Passing score: 70% (a candidate must answer at least 70 of the 100 questions correctly).
  • Assessment: 100 multiple-choice questions, each with four options and one correct answer. As a Level 2 examination, it tests both recall and the application of concepts to market situations.
  • Time limit: 150 minutes for the 100 multiple-choice questions.
  • Exam fee: RM1,250 per sitting (first sitting and re-sitting) under the current SIDC examination terms and conditions; fees are set by the SIDC and subject to change.

Keys to Passing

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

SIDC Module 18 Study Tips from Top Performers

1Familiarise yourself with stock valuation models such as the Constant Growth Dividend Discount Model (Gordon Growth Model) and pricing multiples (P/E, P/B), and be prepared for quantitative valuation questions.
2Understand bond pricing and yield calculations, including yield to maturity (YTM), current yield, and how coupon rate relates to bond price. Master the concepts of duration and convexity as tools for measuring interest rate risk.
3Learn the contract specifications for Malaysia's key derivatives contracts traded on Bursa Malaysia Derivatives: FBM KLCI Futures (FKLI) and Crude Palm Oil Futures (FCPO), including contract multipliers and settlement methods.
4Review technical analysis concepts, including support and resistance levels, trendlines, common chart patterns, and the application of indicators like moving averages, MACD, and RSI.
5Practise calculation questions for derivatives trading, such as options payoff/profit at expiry, hedging ratios, margin requirements, and futures basis.
6Study modern portfolio theory basics, the CAPM formula, portfolio standard deviation calculations, and risk-adjusted return ratios (Sharpe, Treynor, Jensen's Alpha).

Frequently Asked Questions

How many questions are on SIDC Module 18 and what is the time limit?

Module 18: Securities and Derivatives Trading (Products and Analysis) consists of 100 multiple-choice questions to be completed within 150 minutes (2.5 hours).

What is the passing mark for SIDC Module 18?

The passing mark for SIDC Module 18 is 70%. Candidates must answer at least 70 out of the 100 questions correctly to pass.

How much does the Module 18 examination cost?

The current SIDC registration fee for Module 18 is RM1,250 per sitting for both the first attempt and re-sittings. Fees are set by the SIDC under its revised fee structure and are subject to change.

What licence does passing Module 18 lead to?

Passing Module 18 is required to apply for a Capital Markets Services Representative’s Licence (CMSRL) to carry out the regulated activities of both dealing in securities and dealing in derivatives. It is typically paired with Module 17 (Rules and Regulations).

Does Module 18 cover derivatives and equities?

Yes. Unlike Module 6 (Stock Market and Securities Law) which focuses only on equities, or Module 14 (Derivatives) which focuses only on derivatives, Module 18 is a dual-activity exam covering products and analysis for both securities and derivatives markets.