M6 — CM-EIP: Securities, CIS (EIP) and Foreign Exchange
Case Studies
Chapter 12 does not add new content. It tests Chapters 1 to 11 through short client scenarios: a named client, an age, an objective and a few product or market facts, followed by one question. Most case studies ask you to pick the right formula and compute, such as an SGD return on a foreign share, a TERP, a REIT's gearing or a warrant's break-even. The rest ask you to judge, such as which hedge fits or which fund diversifies best. In the full mock these items are mixed in with the other questions, so you need a fast, repeatable method and the calculation families below at your fingertips.
15 min read·9 sections
✓Checked against the IBF CM-EIP syllabus chapter 12, Case Studies, drawing on chapters 1-11 (checked 13 Sep 2026); SDIC Deposit Insurance Scheme scope of coverage and FAQs (sdic.org.sg); CPF Board CPFIS Risk Classification System (cpf.gov.sg); Code on Collective Investment Schemes Appendix 6 paragraph 9.2 REIT leverage limit and interest cover (introduced Nov 2024; Code last revised 2 July 2026) and MAS monetary policy framework (mas.gov.sg), checked 13 Sep 2026. Unofficial prep, not endorsed by MAS or IBF.
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Must-know for the exam
✓Method: (1) read the client facts, (2) name the chapter being tested, (3) compute with the right formula, (4) check the answer against the client's objective, time horizon and risk.
✓TVM: FV = PV x (1 + r)^n; PV = FV / (1 + r)^n; sinking-fund payment = FV x r / ((1 + r)^n - 1); start-of-period payments (annuity due) = ordinary annuity x (1 + r).
✓FX: SGD return = (1 + local return) x (FX end / FX start) - 1. Forward = spot x (1 + quote-currency rate) / (1 + base-currency rate). A bank buys the base currency from you at its bid.
✓Equities: TERP = (N x cum-rights price + subscription price) / (N + 1) for a 1-for-N issue; value of a right = TERP - subscription price. Splits and bonus issues change share count, not value.
✓Fixed income: current yield = coupon / price; % price change = -modified duration x yield change; T-bill return = discount / price paid x 365 / days.
✓SDIC, as at 13 Sep 2026: Singapore-dollar savings, current and fixed deposits are insured up to S$100,000 in aggregate per depositor per Scheme member. Foreign currency deposits, structured deposits and investment products are not insured.
✓Portfolio: return and beta are weighted averages; CAPM required return = rf + beta x (Rm - rf); Sharpe = (R - rf) / standard deviation; two-asset variance = w1^2 s1^2 + w2^2 s2^2 + 2 w1 w2 r s1 s2.
✓CPFIS Risk Classification System, as at 13 Sep 2026 (unit trusts, ILPs and ETFs included under CPFIS): equity risk is Higher, Medium to High, Low to Medium or Lower Risk; focus risk is Broadly Diversified or Narrowly Focused (Regional, Sector, Country).
✓REITs: distribution yield = DPU / current price; gearing = borrowings / total assets. As at 13 Sep 2026 MAS caps REIT aggregate leverage (borrowings and deferred payments) at 50% of deposited property, with a minimum interest coverage ratio of 1.5 times (Code on CIS, Appendix 6 para 9.2).
✓ILPs: units = premium x allocation rate / offer price; value units at the bid price; cost of insurance is charged on the sum at risk (death benefit - policy value).
✓Warrants: intrinsic value = (share - exercise) / warrants per share; premium = (warrant x ratio + exercise - share) / share; break-even = exercise + warrant x ratio. Before expiry, selling usually beats exercising.
✓Signals: 50-day MA above 200-day is a golden cross (bullish); RSI above 70 is overbought, below 30 oversold; Bollinger Bands = MA plus or minus 2 SD; about 68%, 95% and 99.7% of normal outcomes lie within 1, 2 and 3 SD.
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Traps that cost marks
→Using simple interest, or miscounting the years between age 58 and age 65, instead of compounding for exactly 7 years.
→Mixing up an ordinary annuity with an annuity due, or ignoring compounding by simply dividing the goal by the number of years.
→Discounting with simple interest, which understates the power of compounding and makes the parents set aside too much.
→Valuing start-of-year withdrawals as an ordinary annuity, which leaves the retiree short by the first year's interest.
→Assuming more frequent compounding always wins, without converting both quotes to an effective annual rate.
→Planning in today's dollars, or adding inflation as simple interest, which understates the future income needed.
→Leaving out the dividend, or dividing by the selling price rather than the amount originally invested.
→Quoting the nominal-minus-inflation shortcut when the exact real return is asked for.
Why case studies matter and a four-step method
•Case studies reward candidates who can move from facts to formula quickly. The scenario gives more detail than you need, and the distractors are the answers you get from a typical slip: the wrong number of years, the wrong side of a quote, a ratio inverted.
•Step 1, read the facts: underline the client's objective, time horizon, amounts, rates and any words such as start of each year, hypothetical, to 2 decimal places.
•Step 2, name the chapter: TVM, returns, market drivers, FX, ratios, equities, fixed income, portfolio, funds and insurance, warrants or technical signals. This tells you which formula family applies.
•Step 3, compute: write the formula before the numbers. Count periods carefully, age 58 to 65 is 7 years.
•Step 4, check: does the answer fit the client? A retiree needing income in two years should not hold the longest-duration bond. A client fearing USD weakness should sell USD forward, not buy it.
•Worked example: Mdm Lee, 60, needs S$80,000 in 10 years and can earn 4% a year. Chapter: TVM, present value. PV = 80,000 / 1.04^10 = S$54,045.13. Check: a lump sum below the goal, as expected when money grows.
•Trap: answering with a correct formula applied to the wrong fact, such as using the purchase price where the question asks for yield at today's price.
•Takeaway: facts, chapter, formula, then sense-check against the client's objective, horizon and risk.
Time value and returns
•Retirement and education goals are TVM problems. Decide whether the question wants a future value, a present value, a regular payment, or an income stream, and whether payments fall at the start or end of each period.
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