Chapter 1 of the syllabus covers the traditional asset classes that every fund is built from: cash and deposits, money-market instruments, bonds and shares. Exam questions test whether you can tell the features apart (who is a creditor and who is an owner, what is contractual and what is discretionary), run short calculations (T-bill return, current yield, conversion value, TERP, EPS and P/E), rank claims in a liquidation, and match each asset to a client's objective. Singapore facts such as SDIC cover, SGS T-bills and bonds, Singapore Savings Bonds and the tax treatment of gains and dividends appear in scenario items.
14 min read·10 sections
✓Checked against the SCI M8 syllabus (exam details page, Contents and Objectives), SDIC Deposit Insurance FAQ, MAS SGS T-bill, SGS bond and Singapore Savings Bond pages and FAQs, MoneySense Understanding bonds and Guide to shares, IRAS (capital gains and one-tier dividends), S&P Global Ratings and Moody's rating definitions, checked 13 Sep 2026. Unofficial prep, not endorsed by MAS or SCI.
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Must-know for the exam
✓SDIC deposit insurance: S$100,000 per depositor per Scheme member, effective 1 Apr 2024 (was S$75,000). Covers Singapore-dollar savings, current and fixed deposits and SRS monies, aggregated per member bank (as at 13 Sep 2026).
✓Deposits give liquidity and a stable nominal value but lose purchasing power when interest is below inflation. Real value = nominal amount / (1 + inflation).
✓Money-market instruments (T-bills, commercial paper, bankers' acceptances, NCDs, repos) are short-term debt: high liquidity, low risk, low return.
✓SGS T-bills (as at 13 Sep 2026): 6-month and 1-year, issued at a discount with no coupon, uniform-price auction at the cut-off yield, minimum S$1,000 in multiples of S$1,000.
✓T-bill return on price paid = (face value - price) / price. Annualise a 6-month figure by doubling (simple).
✓Coupon = coupon rate x face value, fixed for a fixed-rate bond. Current yield = annual coupon / market price.
✓Bond prices and yields move inversely. Longer maturity and lower coupon mean greater price sensitivity; a zero-coupon bond is the most sensitive for its maturity.
✓Investment grade: BBB- and above (S&P, Fitch) or Baa3 and above (Moody's). BB+ / Ba1 and below is high-yield.
✓Callable bond: issuer's option, higher yield, call and reinvestment risk. Puttable bond: holder's option, lower yield. Convertible: conversion value = conversion ratio x share price; lower coupon.
✓Perpetual securities have no maturity date; calls are at the issuer's option and distributions may be deferred if the terms allow.
✓SGS bonds: fixed coupon every six months, 2 to 50 years, tradable on SGX. SSBs: S$500 minimum, S$200,000 cap, up to 10 years, step-up interest, monthly redemption without penalty, not tradable. Both Government-backed (as at 13 Sep 2026).
✓TERP = (old shares x cum-rights price + new shares x subscription price) / total shares. Bonus issues and splits change share count and price, not value.
✓IRAS: Singapore does not tax capital gains; one-tier dividends from Singapore-resident companies are exempt; no withholding tax on dividends (as at 13 Sep 2026).
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Traps that cost marks
→Candidates credit deposits with inflation protection because the balance never falls in dollar terms.
→Treating a rising nominal balance as a gain in real wealth, or multiplying by (1 - inflation) instead of dividing.
→Equating 'the balance never falls' with 'no risk', ignoring inflation and opportunity cost.
→Assuming a fixed deposit can be broken early with no cost to the interest earned.
→Picking a higher-yielding deposit when the stated need is day-to-day payments.
→Applying the limit per account rather than per depositor per Scheme member, or using the old S$75,000 limit.
→Aggregating across different Scheme members, or assuming foreign-currency deposits are insured.
→Comparing headline deposit rates across currencies without allowing for currency movements.
Cash and deposits: stable dollars, shrinking value
•Savings, current and fixed deposits are the most liquid and capital-stable assets. A current account is for payments and pays little or no interest. A fixed deposit pays a higher rate for a set term; banks usually cut or forfeit interest on early withdrawal.
•SDIC deposit insurance, as at 13 Sep 2026, covers Singapore-dollar savings, current and fixed deposits and SRS monies up to S$100,000 per depositor per Scheme member (effective 1 Apr 2024; previously S$75,000). All eligible deposits at one member bank are added together. Deposits at a different member bank get a separate S$100,000.
•A foreign-currency deposit adds exchange-rate risk. A higher headline rate can be wiped out if that currency weakens against the Singapore dollar.
•Trap: examiners offer 'no risk' for deposits. The nominal balance is stable, but inflation and opportunity cost still erode real wealth. Another trap applies the SDIC cap per account instead of per depositor per member bank.
•Worked example: S$10,000 earns 1.0% for a year while prices rise 3.0%.
•Nominal balance = S$10,100. Real value = 10,100 / 1.03 = S$9,805.83.
•Her balance grew in dollars but buys about 1.9% less.
•Takeaway: Deposits protect dollars, not purchasing power. SDIC covers S$100,000 per depositor per member bank, Singapore-dollar deposits only.
Money-market instruments
•Money-market instruments are short-term debt, generally maturing within a year. They are liquid, low-risk and low-return.
•Treasury bills: government discount instruments. SGS T-bills come in 6-month and 1-year tenors, minimum S$1,000 (as at 13 Sep 2026).
•Negotiable certificates of deposit: bank time deposits that can be sold to another investor before maturity.
•Commercial paper: short-term unsecured notes of highly rated companies, usually sold at a discount.
•Bankers' acceptances: time drafts that a bank has accepted, so the bank must pay at maturity.
•Repurchase agreements: sale of securities with an agreement to buy them back at a higher price. Economically a secured short-term loan.
•SGS T-bill auctions are uniform-price. Every successful bidder is allotted at the cut-off yield, including competitive bidders who bid a lower yield. Non-competitive bidders state only an amount and accept the cut-off yield.
•Trap: dividing the discount by face value instead of the price paid, and assuming each bidder gets their own bid yield.
•Worked example 1: 1-year T-bill, face S$10,000, price S$9,700.
•Return on price = 300 / 9,700 = 3.09%. The discount on face is 3.00%, which understates the return on money invested.
•Worked example 2: 6-month T-bill, face S$5,000, price S$4,925.
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