SIDC Module 7 Structured products question: full capital protection at maturity pays

SIDC Module 7Structured products

A note with full capital protection at maturity pays 100% participation in an index's rise. The index falls 18% over the term. The investor holds to maturity and the issuer is solvent. What does the investor receive per RM100?

A RM118
B RM82
C Nothing
D RM100

Show the answer and explanation

Answer: D. RM100

With full capital protection held to maturity and a solvent issuer, the investor receives the protected RM100 whatever the index does; the option component simply expires worthless when the index falls. RM82 would apply to an unprotected product. RM118 mirrors the fall as a gain. Nothing is paid only if the issuer defaults. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 8 Structured Products; J. C. Hull, Options, Futures, and Other Derivatives (as at October 2026).

Common mistake

Applying index losses to a fully protected note held to maturity.

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Related SIDC Module 7 questions

A note pays 100% participation in an index's rise, capped at 15%, with full capital protection. The index rises 25%. What does the investor receive per RM100?A three-year capital-protected note uses a zero-coupon component yielding 3.5% a year (annual compounding). Ignoring fees, how much of each RM100 is available to buy the option component?A capital-protected note pays 100% of capital at maturity plus 70% of any rise in an index (participation rate 70%). The index rises 20% over the term. What is the investor's total return?

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Original study material mapped to the public SIDC Module 7 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.