English HKSI Paper 6 Topic 1
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- Answered
- Review
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Question 1 of 673
1. Question
1 pointsQID1:The existence of the financial markets in Hong Kong can satisfy which of the following demands?
I. Meet demands for investment, capitalization and risk management.
II. Meet demands for employment
III. Provide an avenue for price discovery
IV. Provide liquidity for investmentsCorrect
The demands for employment is not a function satisfied by financial market alone, thus is not a primary reason for the existence of the financial markets in Hong Kong.
Incorrect
The demands for employment is not a function satisfied by financial market alone, thus is not a primary reason for the existence of the financial markets in Hong Kong.
Hint
Reference Chapter:1.1.1
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Question 2 of 673
2. Question
1 pointsQID1498:The regulation of the asset management industry needs to cover
I. Products
II. Services
III. Intermediaries
IV. InvestorsCorrect
The regulation of the asset management industry needs to cover not only products and services but also intermediaries and investors.
Incorrect
The regulation of the asset management industry needs to cover not only products and services but also intermediaries and investors.
Hint
Reference Chapter:1.1.10
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Question 3 of 673
3. Question
1 pointsQID625:Which of the following are examples of products of collective investment schemes?
I. Equity Funds
II. Sovereign Fund
III. Money Market Fund
IV. Index FundCorrect
A Sovereign Fund doesn’t meet the established criteria to be considered a CIS.
Incorrect
A Sovereign Fund doesn’t meet the established criteria to be considered a CIS.
Hint
Reference Chapter:1.1.12
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Question 4 of 673
4. Question
1 pointsQID2674:Which of the following activity is subject to supervision by the financial regulators?
Correct
Providing a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
Incorrect
Providing a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
Hint
Reference Chapter:1.1.13
-
Question 5 of 673
5. Question
1 pointsQID1500:Which of the following are service providers in the asset management industry?
I. Banks
II. Trustees
III. Custodians
IV. Financial PlannersCorrect
Typical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersIncorrect
Typical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersHint
Reference Chapter:1.1.13
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Question 6 of 673
6. Question
1 pointsQID1499:Which of the following are service providers of the Asset Management Industry in Hong Kong?
I. Fund houses
II. Auditors
III. Fund management companies
IV. StockbrokersCorrect
Typical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersIncorrect
Typical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersHint
Reference Chapter:1.1.13
-
Question 7 of 673
7. Question
1 pointsQID5:Which of the followings is not a service provider in the asset management industry?
Correct
The definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
Incorrect
The definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
Hint
Reference Chapter:1.1.13
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Question 8 of 673
8. Question
1 pointsQID4:Which of the following is a financial service provided by a financial intermediary?
Correct
Financial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
Incorrect
Financial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
Hint
Reference Chapter:1.1.14
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Question 9 of 673
9. Question
1 pointsQID1501:Which of the following are classified as investors in the asset management industry?
I. Private Banking Clients
II. Retail Clients
III. Institutions
IV. Sovereign statesCorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Incorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Hint
Reference Chapter:1.1.15
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Question 10 of 673
10. Question
1 pointsQID1502:Which of the following are correct identification of Investors?
I. High Net Worth Investors
II. Retail Investors
III. Institutional investors
IV. Governmental InvestorsCorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Incorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Hint
Reference Chapter:1.1.15
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Question 11 of 673
11. Question
1 pointsQID903:Which of the following are not common objectives of financial regulators in Hong Kong?
I. Promote intervention to enhance international and local market confidence.
II. Provide investment advice to retail investors
III. Encourage the installation of a sound technical infrastructure for the functioning of the financial markets
IV. Ensure that the legal framework of financial regulation is certain, adequate and fairly enforcedCorrect
Frequent Intervention is not an objective of financial regulators in Hong Kong. Providing Investment advice is not a job that regulators will do, it’s the job of intermediaries.
Incorrect
Frequent Intervention is not an objective of financial regulators in Hong Kong. Providing Investment advice is not a job that regulators will do, it’s the job of intermediaries.
Hint
Reference Chapter:1.1.16
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Question 12 of 673
12. Question
1 pointsQID908:Which of the following is one of the objectives of the SFO
Correct
SFO treats all investors fairly and equally. Regulators should be transparent and its power should be in check.
Incorrect
SFO treats all investors fairly and equally. Regulators should be transparent and its power should be in check.
Hint
Reference Chapter:1.1.16
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Question 13 of 673
13. Question
1 pointsQID6:Which of the following is a primary objective of Hong Kong financial regulators?
Correct
Encouraging the development of new products, operating profitable exchanges in Hong Kong and reducing trading hours are all actions. They are action verbs but not objective description. Objectives can only be objective description, therefore, these phrases can never be objectives and primary objective of Hong Kong financial regulators. Objectives are status that financial regulators hope for, enhancing confidence is an objective description that financial regulators hope for.
Incorrect
Encouraging the development of new products, operating profitable exchanges in Hong Kong and reducing trading hours are all actions. They are action verbs but not objective description. Objectives can only be objective description, therefore, these phrases can never be objectives and primary objective of Hong Kong financial regulators. Objectives are status that financial regulators hope for, enhancing confidence is an objective description that financial regulators hope for.
Hint
Reference Chapter:1.1.16
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Question 14 of 673
14. Question
1 pointsQID1503:The SFC commonly face challenges when carrying out the regulatory mandate given to it by the SFO with regard to the Asset Management Business. What are the reasons?
I. The investors investing in investment Schemes are not in Hong Kong
II. Custodians and trustees in collective investment schemes are not in Hong Kong
III. The management of investment schemes is not located in Hong Kong
IV. The operation of the Investment Scheme is not in Hong KongCorrect
As the persons involved in the management, operation and holding of the assets under management are often not located in Hong Kong, this poses certain issues for the SFC in carrying out the regulatory mandate given to it by the SFO.
Incorrect
As the persons involved in the management, operation and holding of the assets under management are often not located in Hong Kong, this poses certain issues for the SFC in carrying out the regulatory mandate given to it by the SFO.
Hint
Reference Chapter:1.1.17
-
Question 15 of 673
15. Question
1 pointsQID47:Which of the following are duties and functions of the Mandatory
Provident Fund Schemes Authority (MPFA) in MPF Schemes?
I. Registering MPF schemes
II. Approving Pooled Investment Schemes
III. Approving trustees and regulating the affairs and activities of such approved trustees
IV. Dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessaryCorrect
The MPFA has responsibility for: (a) registering mandatory provident fund (“MPF”) schemes; (b) approving pooled investment funds; (f) approving trustees and regulating the affairs and activities of such approved trustees; (g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.
Incorrect
The MPFA has responsibility for: (a) registering mandatory provident fund (“MPF”) schemes; (b) approving pooled investment funds; (f) approving trustees and regulating the affairs and activities of such approved trustees; (g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.
Hint
Reference Chapter:1.1.19
-
Question 16 of 673
16. Question
1 pointsQID781:The principal regulator of the securities industry in Hong Kong is the
Correct
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.
Incorrect
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.
Hint
Reference Chapter:1.1.2
-
Question 17 of 673
17. Question
1 pointsQID788:Which of the following regulators in Hong Kong assumes responsibility for front-line regulation and discipline of participants of the securities and futures industry?
Correct
Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.
Incorrect
Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.
Hint
Reference Chapter:1.1.2
-
Question 18 of 673
18. Question
1 pointsQID172:Which of the following is an accurate description of Hong Kong’s financial regulatory structure?
Correct
The broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properlyIncorrect
The broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properlyHint
Reference Chapter:1.1.2
-
Question 19 of 673
19. Question
1 pointsQID2832:Which of the following is not a financial regulator in Hong Kong?
Correct
The Securities Commission option is wrong, the correct name is Securities and Futures Commission.
Incorrect
The Securities Commission option is wrong, the correct name is Securities and Futures Commission.
Hint
Reference Chapter:1.1.2
-
Question 20 of 673
20. Question
1 pointsQID1181:What are the two regulatory authorities primarily involved in regulating the asset management industry
I. SFC
II. HKMA
III. SEHK
IV. HKEXCorrect
Under the SFO and the Banking Ordinance, AFIs, which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-RA.
Incorrect
Under the SFO and the Banking Ordinance, AFIs, which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-RA.
Hint
Reference Chapter:1.1.2
-
Question 21 of 673
21. Question
1 pointsQID782:The SFC is a/an _______ in Hong Kong.
Correct
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above. It is considered the securities and futures market prime regulator.Incorrect
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above. It is considered the securities and futures market prime regulator.Hint
Reference Chapter:1.1.2
-
Question 22 of 673
22. Question
1 pointsQID1192:Insurance brokers should register with which of the following organizations?
Correct
Insurance Brokers should apply for a licence with the Insurance Authority.
Incorrect
Insurance Brokers should apply for a licence with the Insurance Authority.
Hint
Reference Chapter:1.1.22
-
Question 23 of 673
23. Question
1 pointsQID63:Which of the following are functions and duties of the SFC?
I. Supervise the securities and futures markets in Hong Kong
II. Regulate the securities and futures industries
III. Provide professional assistance to the government
IV. Supervise all settlement banks in Hong KongCorrect
The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(b) supervise, monitor and regulate the activities of:
(i) recognised exchange, clearing houses, exchange controllers and investor compensation companies or persons carrying on regulated activities; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.Incorrect
The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(b) supervise, monitor and regulate the activities of:
(i) recognised exchange, clearing houses, exchange controllers and investor compensation companies or persons carrying on regulated activities; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.Hint
Reference Chapter:1.1.3
-
Question 24 of 673
24. Question
1 pointsQID62:The major functions of the SFC include﹕
I. Supervise all of the activities conducted by Registered Institution
II. Promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on regulated activities
III. Promote, encourage and enforce internal control and risk management systems by persons carrying on regulated activities, including registered institutions in the case of any regulated activities they conduct.
IV. Maintain market liquidity in the securities and futures markets.Correct
The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(c) promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on regulated activities;
(g) promote, encourage and enforce internal control and risk management systems by persons carrying on regulated activities, including registered institutions in the case of any regulated activities they conduct.Incorrect
The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(c) promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on regulated activities;
(g) promote, encourage and enforce internal control and risk management systems by persons carrying on regulated activities, including registered institutions in the case of any regulated activities they conduct.Hint
Reference Chapter:1.1.3
-
Question 25 of 673
25. Question
1 pointsQID61:Which of the following is a regulatory objective of the SFC?
Correct
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(d) minimise crime and misconduct in the market.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(d) minimise crime and misconduct in the market.Hint
Reference Chapter:1.1.3
-
Question 26 of 673
26. Question
1 pointsQID60:The regulator objectives of the SFC includes:
I. Consumer rights protection
II. Minimize crime and misconduct within the securities and futures industry.
III. Promote public’s understanding of the securities and futures industry.
IV. Provide advice on the enforcement of economic policies to the governmentCorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.Hint
Reference Chapter:1.1.3
-
Question 27 of 673
27. Question
1 pointsQID59:Under the SFO, which of the following are objectives of the SFO
I. Promote understanding by the public of financial services including the operation and functioning of the industry.
II. Ensure the regulatory standards are identical to international standards.
III. Check and approve new financial products.
IV. Minimize crime and misconduct within the industry.Correct
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the marketIncorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the marketHint
Reference Chapter:1.1.3
-
Question 28 of 673
28. Question
1 pointsQID58:Which of the following is a regulatory objective of the SFC?
I. Provide protection to the investing public
II. Reduce non-systematic risk in the industry
III. Assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.
IV. Assist the HKMA in maintaining the stability of currency in
Hong KongCorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(c) provide protection to the investing public;
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(c) provide protection to the investing public;
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.Hint
Reference Chapter:1.1.3
-
Question 29 of 673
29. Question
1 pointsQID787:Which of the following regulatory approach is adopted by the SFC?
Correct
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 30 of 673
30. Question
1 pointsQID1493:Which of the following are the principles guiding the SFC’s work?
I. Pragmatism
II. Protection of Directors and Senior Management
III. Fair and consistent application of the law and rules
IV. Efficiency of operation,Correct
The SFC’s operations are subject to both internal control processes and, externally, judicial review and the scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC are also subject to an appeal process.
As regards the SFC’s treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach and take all relevant factors into account, for example, the size of the business or the use of any management and supervisory measures to compensate for the apparent failure to meet any specified requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity and soundness of the Hong Kong securities and futures markets for the benefit of investors and the industry”.Incorrect
The SFC’s operations are subject to both internal control processes and, externally, judicial review and the scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC are also subject to an appeal process.
As regards the SFC’s treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach and take all relevant factors into account, for example, the size of the business or the use of any management and supervisory measures to compensate for the apparent failure to meet any specified requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity and soundness of the Hong Kong securities and futures markets for the benefit of investors and the industry”.Hint
Reference Chapter:1.1.3
-
Question 31 of 673
31. Question
1 pointsQID1492:“While the SFC has firm principles of regulation on which it operates, it seeks to maintain an open dialogue with the industry to achieve an appropriate degree of flexibility within the boundaries of those principles.” is describing which principle of the SFC?
Correct
The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
Incorrect
The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
Hint
Reference Chapter:1.1.3
-
Question 32 of 673
32. Question
1 pointsQID1490:Which of the following is not a principle guiding the SFC’s work?
Correct
The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
In seeking the right balance, the SFC consults both industry practitioners and the public on proposed regulatory developments.
Rather than implement detailed standards, the SFC focuses on a higher-level articulation of what the SFC expects registered and licensed persons to do. This allows standards to be maintained for a variety of scenarios in a fast-changing marketplace, and enables businesses to decide how best to secure compliance with regulations having regard to their particular business context.Incorrect
The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
In seeking the right balance, the SFC consults both industry practitioners and the public on proposed regulatory developments.
Rather than implement detailed standards, the SFC focuses on a higher-level articulation of what the SFC expects registered and licensed persons to do. This allows standards to be maintained for a variety of scenarios in a fast-changing marketplace, and enables businesses to decide how best to secure compliance with regulations having regard to their particular business context.Hint
Reference Chapter:1.1.3
-
Question 33 of 673
33. Question
1 pointsQID802:Which of the following are powers that the SFC may NOT delegate to others?
I. Making subsidiary legislations.
II. Establishing committees.
III. Suspending exchange companies.
IV. Intervene in the business operation of registered institutions.Correct
In addition, the SFO provides that it may not delegate certain functions of the SFC to others. They are detailed in Schedule 2, Part 2, SFO. They include powers:
(a) to make subsidiary legislation;
(b) to establish committees under s. 8, SFO;
(c.) to suspend exchange companies;
(d) to appoint external investigators; and
(e.) to intervene in the business operations of licensed corporations.Incorrect
In addition, the SFO provides that it may not delegate certain functions of the SFC to others. They are detailed in Schedule 2, Part 2, SFO. They include powers:
(a) to make subsidiary legislation;
(b) to establish committees under s. 8, SFO;
(c.) to suspend exchange companies;
(d) to appoint external investigators; and
(e.) to intervene in the business operations of licensed corporations.Hint
Reference Chapter:1.1.3
-
Question 34 of 673
34. Question
1 pointsQID57:The SFC﹕
I. Reports to the government
II. Was formed under the Securities and Futures Ordinance
III. Is not responsible for licensing of intermediaries
IV. Is a part of the governmentCorrect
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.Incorrect
The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.Hint
Reference Chapter:1.1.3
-
Question 35 of 673
35. Question
1 pointsQID105:Which of the following organization is responsible for front-line prudential and conduct regulation of market participants?
Correct
Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.
Incorrect
Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.
Hint
Reference Chapter:1.1.3
-
Question 36 of 673
36. Question
1 pointsQID10:Which system or philosophy of regulations is adopted by the SFC to regulate securities and futures markets?
Correct
SFC adopts a“risk-based”approach towards regulations. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
SFC adopts a“risk-based”approach towards regulations. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 37 of 673
37. Question
1 pointsQID8:Which two of the following philosophies and systems of regulations are commonly used by financial regulators in Hong Kong?
I. Merit Based
II. Sanction Based
III. Disclosure Based
IV. Income BasedCorrect
Sanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
Incorrect
Sanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
Hint
Reference Chapter:1.1.3
-
Question 38 of 673
38. Question
1 pointsQID783:What approach does the SFC take to regulate market intermediaries?
Correct
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 39 of 673
39. Question
1 pointsQID784:A risk-based regulatory system refers to a system in which:
Correct
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 40 of 673
40. Question
1 pointsQID785:The SFC regime adopts which of the following regulatory approaches?
Correct
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 41 of 673
41. Question
1 pointsQID786:Which of the following regulatory approaches adopted by the SFC is given more regulatory attention towards the areas where the SFC perceives the highest risks to lie?
Correct
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Incorrect
An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.3
-
Question 42 of 673
42. Question
1 pointsQID2676:Whats the objective of SFC requiring the disclosure of rights?
Correct
Disclosure requiremetns are in place to enhance transperancy
Incorrect
Disclosure requiremetns are in place to enhance transperancy
Hint
Reference Chapter:1.1.3
-
Question 43 of 673
43. Question
1 pointsQID2680:Which of the following description does not fit financial regulators in Hong Kong?
Correct
Decisions made by the regulators can be overturned or overruled.
Incorrect
Decisions made by the regulators can be overturned or overruled.
Hint
Reference Chapter:1.1.3
-
Question 44 of 673
44. Question
1 pointsQID1496: Which of the following is not a general principle that reflects the SFC’s approach to regulating asset management?
Correct
The SFC’s operations are subject to both internal control processes and, externally, judicial review and the scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC are also subject to an appeal process.
As regards the SFC’s treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach and take all relevant factors into account, for example, the size of the business or the use of any management and supervisory measures to compensate for the apparent failure to meet any specified requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity and soundness of the Hong Kong securities and futures markets for the benefit of investors and the industry”.Incorrect
The SFC’s operations are subject to both internal control processes and, externally, judicial review and the scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC are also subject to an appeal process.
As regards the SFC’s treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach and take all relevant factors into account, for example, the size of the business or the use of any management and supervisory measures to compensate for the apparent failure to meet any specified requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity and soundness of the Hong Kong securities and futures markets for the benefit of investors and the industry”.Hint
Reference Chapter:1.1.3
-
Question 45 of 673
45. Question
1 pointsQID999:Mr Liu has advertised himself in multiple newspapers in Hong Kong. He claimed to be a futures contracts expert and can assist clients in dealing with foreign futures contracts. As a matter of fact, Mr Liu was not licenced by or registered with the SFC. Had he done anything wrong?
Correct
To advertise oneself as operating a regulated activity is the same as operating a regulated activity. Conducting a regulated activity without licence or registration is against the SFO.
Incorrect
To advertise oneself as operating a regulated activity is the same as operating a regulated activity. Conducting a regulated activity without licence or registration is against the SFO.
Hint
Reference Chapter:1.1.3
-
Question 46 of 673
46. Question
1 pointsQID1494:What is the primary function of Registered Institution in the Asset Management Business?
Correct
Many AFIs participate in the fund management industry as distributors of CISs products. Accordingly, the HKMA, in its capacity as the banking regulatory authority, is concerned with the asset management industry insofar as it affects AFIs engaged in the regulated activity of asset management, i.e. registered institutions.
Incorrect
Many AFIs participate in the fund management industry as distributors of CISs products. Accordingly, the HKMA, in its capacity as the banking regulatory authority, is concerned with the asset management industry insofar as it affects AFIs engaged in the regulated activity of asset management, i.e. registered institutions.
Hint
Reference Chapter:1.1.4
-
Question 47 of 673
47. Question
1 pointsQID45:Which of the following are primary functions of the MPFA?
I. Approving fund managers of the investment products of MPF Schemes
II. Regulating supervise and monitoring MPF Schemes
III. Monitoring compliance with the MPFSO
IV. Authorizing the offer documents and marketing materials of the investment products of the MPF prior to their issue or publicationCorrect
The MPFA has responsibility for: (d) ongoing monitoring of compliance by MPF products with the Mandatory Provident
Fund Schemes Ordinance (“MPFSO”); (e) investigating alleged breaches of the provisions of the MPFSO;Incorrect
The MPFA has responsibility for: (d) ongoing monitoring of compliance by MPF products with the Mandatory Provident
Fund Schemes Ordinance (“MPFSO”); (e) investigating alleged breaches of the provisions of the MPFSO;Hint
Reference Chapter:1.1.5
-
Question 48 of 673
48. Question
1 pointsQID44:The Mandatory Provident Fund Authority (MPFA) was established under the
Correct
The MPFA is the primary regulator for the MPF system under the MPFSO, and is responsible for the overall management and administration of the MPF system, including the registration and regulation of the various schemes established under the ordinance.
Incorrect
The MPFA is the primary regulator for the MPF system under the MPFSO, and is responsible for the overall management and administration of the MPF system, including the registration and regulation of the various schemes established under the ordinance.
Hint
Reference Chapter:1.1.5
-
Question 49 of 673
49. Question
1 pointsQID48:Which of the following activities is Mandatory Provident Fund Schemes Authority (“MPFA”) responsible for ?
Correct
The MPFA has responsibility for: (f) approving MPF trustees and regulating the affairs and activities of such approved trustees.
Incorrect
The MPFA has responsibility for: (f) approving MPF trustees and regulating the affairs and activities of such approved trustees.
Hint
Reference Chapter:1.1.5
-
Question 50 of 673
50. Question
1 pointsQID51:Which of the following matters is the Securities and Futures Commission (SFC) responsible for relating to Mandatory Provident Fund (MPF) products?
I. Authorisation of the offering documents for the investment products of MPF Schemes.
II. Licensing of investment managers of investment products of MPF Schemes.
III. Regulate, supervise and monitor MPF Schemes
IV. Registration of employer sponsored MPF schemes for employers.Correct
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC, which are:
(a) vetting and authorising MPF products and related marketing materials in accordance with the provisions of the SFC Code on MPF Products and the relevant ordinances (including the SFO);
(b) registering and approving investment managers and continued monitoring of their conduct in the investment management of MPF productsIncorrect
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC, which are:
(a) vetting and authorising MPF products and related marketing materials in accordance with the provisions of the SFC Code on MPF Products and the relevant ordinances (including the SFO);
(b) registering and approving investment managers and continued monitoring of their conduct in the investment management of MPF productsHint
Reference Chapter:1.1.5
-
Question 51 of 673
51. Question
1 pointsQID1495:The Mandatory Provident Fund Schemes Authority (MPFA) does NOT have which ONE of the following objectives?
Correct
It is not an obligation on the MPFA’s part to ensure that the schemes are operated to maximise the capital or income growth specified in the objectives of the schemes.
Incorrect
It is not an obligation on the MPFA’s part to ensure that the schemes are operated to maximise the capital or income growth specified in the objectives of the schemes.
Hint
Reference Chapter:1.1.7
-
Question 52 of 673
52. Question
1 pointsQID1497:Which of the following is not a general principles followed by the
MPFA?Correct
It is not an obligation on the MPFA’s part to ensure that the schemes are operated to maximise the capital or income growth specified in the objectives of the schemes, or to advise on, or ensure, the employers’ and scheme members’ choice of the best schemes/funds to achieve their objectives.
Incorrect
It is not an obligation on the MPFA’s part to ensure that the schemes are operated to maximise the capital or income growth specified in the objectives of the schemes, or to advise on, or ensure, the employers’ and scheme members’ choice of the best schemes/funds to achieve their objectives.
Hint
Reference Chapter:1.1.7
-
Question 53 of 673
53. Question
1 pointsQID1193:The Insurance Authority is responsible for prudential supervision of the insurance industry, it seeks to
I. ensure the financial stability of the industry
II. promote a high level efficiency in the administration of the industry
III. encourage the professionalism of the fund managers participating in insurance-related business, the insurance agents and brokers
IV. achieve the best balance between its overall supervision and the maximum effective self-regulation of the industry through
self-regulatory organizationsCorrect
The Insurance Authority has the following major duties and powers:
(a) the authorization and regulation of insurers;
(b) the regulation of insurance agents, who must be appointed by an insurer and registered with the Insurance Agents Registration Board, established by The Hong Kong Federation of Insurers. The agents are not directly authorised or supervised by the Insurance Authority. Supervision is by the appointing insurers, who are required to comply with the Code of Practice for the Administration of Insurance Agents issued by The Hong Kong Federation of Insurers and approved by the Insurance Authority;
(c) the regulation of insurance brokers, who may obtain authorization from the Insurance Authority or from one of two bodies approved by the Insurance Authority, the Hong Kong
Confederation of Insurance Brokers and the Professional Insurance Brokers Association. These bodies are charged with the responsibility of ensuring that their members comply with the statutory requirements and that the interests of policy holders are properly protected; they also handle complaints; and
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Incorrect
The Insurance Authority has the following major duties and powers:
(a) the authorization and regulation of insurers;
(b) the regulation of insurance agents, who must be appointed by an insurer and registered with the Insurance Agents Registration Board, established by The Hong Kong Federation of Insurers. The agents are not directly authorised or supervised by the Insurance Authority. Supervision is by the appointing insurers, who are required to comply with the Code of Practice for the Administration of Insurance Agents issued by The Hong Kong Federation of Insurers and approved by the Insurance Authority;
(c) the regulation of insurance brokers, who may obtain authorization from the Insurance Authority or from one of two bodies approved by the Insurance Authority, the Hong Kong
Confederation of Insurance Brokers and the Professional Insurance Brokers Association. These bodies are charged with the responsibility of ensuring that their members comply with the statutory requirements and that the interests of policy holders are properly protected; they also handle complaints; and
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Hint
Reference Chapter:1.1.8
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Question 54 of 673
54. Question
1 pointsQID40:What is the most material difference between the Insurance Authority and other regulators?
Correct
The Insurance Authority has the following major duties and powers:
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Incorrect
The Insurance Authority has the following major duties and powers:
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Hint
Reference Chapter:1.1.9
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Question 55 of 673
55. Question
1 pointsQID1237:Which of the following descriptions about corporate governance are correct?
I. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders.
II. The governance issue is also concerned with the system by which companies are directed and controlled.
III. The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market.
IV. Markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Hint
Reference Chapter:1.10.
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Question 56 of 673
56. Question
1 pointsQID2441:A good corporate-governance is not related to which of the following people?
Correct
A good corporate-governance is not related to former employees.
Incorrect
A good corporate-governance is not related to former employees.
Hint
Reference Chapter:1.10.1
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Question 57 of 673
57. Question
1 pointsQID1239:Corporate governance describes which of the following relationship?
Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.1
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Question 58 of 673
58. Question
1 pointsQID1684:Good Corporate governance are not required to be responsible for the interest of which of the following
Correct
Good Corporate governance are not required to be responsible for the interest of Former Employees.
Incorrect
Good Corporate governance are not required to be responsible for the interest of Former Employees.
Hint
Reference Chapter:1.10.1
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Question 59 of 673
59. Question
1 pointsQID509:Corporate governance refers to the system of by which companies are directed and controlled and concerns which of the following groups of people?
I. Company management.
II. Board of Directors.
III. Shareholders.
IV. Stakeholders.Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.1
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Question 60 of 673
60. Question
1 pointsQID1508:The Securities and Futures Commission (SFC) uses which of the following general principles in regulating asset management?
I. It recognises overseas jurisdictions with acceptable regimes as domiciles for authorised collective investment schemes (CIS).
II. It recognises supervision by specified inspection regimes overseas of management companies located in the respective jurisdictions as acceptable for its purposes.
III. It employs a consultative process involving the industry before making significant regulatory changes.
IV. It seeks to protect the interests of all investors in authorised CIS in Hong Kong and overseas.Correct
Certain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.Incorrect
Certain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.Hint
Reference Chapter:1.10.10
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Question 61 of 673
61. Question
1 pointsQID1244:In order to facilitate compliance with applicable legal and regulatory requirements in Hong Kong and overseas jurisdictions, which of the following measures can intermediaries take for better coordination?
I. Engage a dedicated compliance officer to oversee adherence to the compliance manual.
II. Appoint a director to serve as a Compliance Officer to oversee adherence to the compliance manual.
III. Maintain close contact with the regulators.
IV. Complement the manual with well defined operational procedures and practices.Correct
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
Incorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
Hint
Reference Chapter:1.10.10
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Question 62 of 673
62. Question
1 pointsQID1509:Asset management companies should carry which of the following functions to facilitate compliance with applicable laws and regulations?
I. Assign designated compliance officers
II. Prepare a set of written compliance procedures, operational procedures and manuals
III. Encourage the use of mobile phones and instant messaging system to enhance workplace communication efficiency
IV. Ban the use of paper-based instructions between departments to minimize human errorsCorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is appointed who oversees adherence to the manual and also maintains close contact with the regulators and keeps abreast of regulatory developments affecting the asset manager’s business.
Incorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is appointed who oversees adherence to the manual and also maintains close contact with the regulators and keeps abreast of regulatory developments affecting the asset manager’s business.
Hint
Reference Chapter:1.10.10
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Question 63 of 673
63. Question
1 pointsQID1629:VitaSauce is a corporation planning to be listed on the SEHK. VitaSauce has been in losses in the past 3 years, and profited over one billion in the recent year. Yet, there was less than 10 million cash flow in these 3 years. Investment bankers estimated that if VitaSauce is listed, the market value will be over 6 billion. Which of the following quantitative tests is more likely to be applied on VitaSauce?
Correct
The issuer must satisfy at least one of the following quantitative tests: profit test; market capitalisation/revenue/cash flow test; market capitalisation/revenue test.
The issuer must have a market capitalisation of at least HK$4 billion at the time of listing, and revenue of at least HK$500 million for the most recent audited financial year.Incorrect
The issuer must satisfy at least one of the following quantitative tests: profit test; market capitalisation/revenue/cash flow test; market capitalisation/revenue test.
The issuer must have a market capitalisation of at least HK$4 billion at the time of listing, and revenue of at least HK$500 million for the most recent audited financial year.Hint
Reference Chapter:1.10.3
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Question 64 of 673
64. Question
1 pointsQID1241:The primary objective of good corporate governance is to:
Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
Hint
Reference Chapter:1.10.5
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Question 65 of 673
65. Question
1 pointsQID929:Which of the following are not examples of good corporate governance?
I. Set up remuneration committee to control the remuneration of management.
II. Assign the management to multiple roles to cut cost.
III. Offer high degree of discretionary powers to the management to allow them to enhance efficiency.
IV. Install check and balances to limited the power of the managementCorrect
The essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
Incorrect
The essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
Hint
Reference Chapter:1.10.5
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Question 66 of 673
66. Question
1 pointsQID1242:A company may improve its corporate governance through the following means with the exception of:
Correct
Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersIncorrect
Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersHint
Reference Chapter:1.10.5
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Question 67 of 673
67. Question
1 pointsQID510:Corporate governance includes which of the following features?
I. The recruitment of experienced executive directors who are realistically rewarded to ensure that the business is run
efficiently.
II. The installation of a well regulated structure incorporating close and detailed top managerial supervision of day-to-day
operations of the business.
III. The recruitment of experienced non-executive directors with the objective of ensuring a good balance between executive
and non-executive directors.
IV. Installation of audit and remuneration committees who will ensure independent audits and fair performance geared reward structures.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.Hint
Reference Chapter:1.10.5
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Question 68 of 673
68. Question
1 pointsQID1240:Which of the following is NOT a probable measure that can be taken to improve corporate governance?
Correct
It’s not required to protect the interests of the management.
Incorrect
It’s not required to protect the interests of the management.
Hint
Reference Chapter:1.10.5
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Question 69 of 673
69. Question
1 pointsQID511:Which of the following measures reflect effective corporate governance?
I. Installing appropriate checks and balances.
II. Increasing transparency and disclosure to shareholders , stakeholders and the public.
III. Adopting international accounting and auditing standards.
IV. Installing strong protective structures for minority shareholders, creditors and other lenders.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.Hint
Reference Chapter:1.10.5
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Question 70 of 673
70. Question
1 pointsQID512:Good governance practices can include which of the following ways?
I. Installing appropriate checks and balances on the board of
directors and senior management.
II. Having sufficient transparency and disclosure of important facts and information to stakeholders.
III. Installing strong protective structures for majority shareholder.
IV. Identifying and penalizing corporate wrongdoing.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.Hint
Reference Chapter:1.10.5
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Question 71 of 673
71. Question
1 pointsQID971:Good corporate governance should separate the functions of
Correct
Good corporate governance should separate the functions of Chairman and CEO.
Incorrect
Good corporate governance should separate the functions of Chairman and CEO.
Hint
Reference Chapter:1.10.5
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Question 72 of 673
72. Question
1 pointsQID2757:Which of the following is a concept provided by the Organisation for Economic Co-operation and Development that a company can improve the level of corporate governance?
I. Distinguish between the Chief Executive Officer and the Chairman of the Board
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a robust protection structure for minority shareholders, creditors or other stakeholdersCorrect
The Organisation for Economic Co-operation and Development offers the concept that companies can improve the level of corporate governance by the following methods:
I. Distinguish between the Chief Executive Officer and the Chairman
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a strong protection structure for minority shareholders, creditors, or other stakeholders
V. Establish an independent audit committee
VI. Identify business misconduct
VII. Adopt international accounting and auditing standardsIncorrect
The Organisation for Economic Co-operation and Development offers the concept that companies can improve the level of corporate governance by the following methods:
I. Distinguish between the Chief Executive Officer and the Chairman
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a strong protection structure for minority shareholders, creditors, or other stakeholders
V. Establish an independent audit committee
VI. Identify business misconduct
VII. Adopt international accounting and auditing standardsHint
Reference Chapter:1.10.5
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Question 73 of 673
73. Question
1 pointsQID1238:To promote, encourage and enforce good compliance practices. Senior management of Licensed Corporations (LC)s and Registered Institutions (RI)s must establish:
I. Good line and reporting structures.
II. Well defined functions and responsibilities.
III. Effective communications channels.
IV. Appropriate transparency and disclosure practices.Correct
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.Incorrect
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.Hint
Reference Chapter:1.10.5
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Question 74 of 673
74. Question
1 pointsQID2718:Which of the following is not a common consequence of inadequate corporate governance standards?
Correct
Common consequences of deficit in corporate governance standards:
I. Insider trading and other forms of market misconduct
II. Misfeasance, fraud, and misconduct by directors, managers, and other staff causing losses to the company or shareholders
IV. The price of the connected transaction deviates from the market price, causing losses to the company and shareholdersIncorrect
Common consequences of deficit in corporate governance standards:
I. Insider trading and other forms of market misconduct
II. Misfeasance, fraud, and misconduct by directors, managers, and other staff causing losses to the company or shareholders
IV. The price of the connected transaction deviates from the market price, causing losses to the company and shareholdersHint
Reference Chapter:1.10.6
-
Question 75 of 673
75. Question
1 pointsQID1243:The SFC performs its regulatory mandate to supervise the industry through which of the following means?
I. Regular inspections, including on-site inspections.
II. Unscheduled inspections, including on-site inspections.
III. Obtaining information from Licensed Corporations (LC)s.
IV. Obtaining information from the Registered Institutions (RI)s.Correct
In furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
Incorrect
In furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
Hint
Reference Chapter:1.10.7
-
Question 76 of 673
76. Question
1 pointsQID49:Which of the following statements is incorrect?
Correct
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC, which are: (a) vetting and authorising MPF products and related marketing materials in accordance
with the provisions of the SFC Code on MPF Products and the relevant ordinances (including the SFO). This means the IA doesn’t regulate MPF products at all.Incorrect
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC, which are: (a) vetting and authorising MPF products and related marketing materials in accordance
with the provisions of the SFC Code on MPF Products and the relevant ordinances (including the SFO). This means the IA doesn’t regulate MPF products at all.Hint
Reference Chapter:1.11.
-
Question 77 of 673
77. Question
1 pointsQID1510:Which of the following are requirements in the Code of Conduct for Mandatory Provident Fund (MPF) Intermediaries regarding the manner in which an MPF intermediary should deal with clients?
I. It should discuss the calibre of investment managers using all
available information such as the past performance records of
SFC collective investment schemes (CIS) and MPF schemes
they have managed, as successful past records would assist in
predicting their future performance.
II. An MPF individual intermediary acting for more than one
corporation should disclose for which corporation he is acting
when dealing with a client.
III. When advising a client on the selection of constituent funds, it
should consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectives.
IV. The intermediary should not receive any cash payments for or on behalf of clients and should ensure that all client payments
are made payable to the management company of the scheme.Correct
A principal intermediary must apply for the approval of either (i) a subsidiary intermediary or (ii) an individual, which will in each case be attached to the principal intermediary for the purpose
of carrying on activities regulated by the MPFSO and be appointed as a responsible officer.
The main performance requirements that MPF intermediaries should meet are that they must:
when advising clients on the selection of constituent funds, consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectivesIncorrect
A principal intermediary must apply for the approval of either (i) a subsidiary intermediary or (ii) an individual, which will in each case be attached to the principal intermediary for the purpose
of carrying on activities regulated by the MPFSO and be appointed as a responsible officer.
The main performance requirements that MPF intermediaries should meet are that they must:
when advising clients on the selection of constituent funds, consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectivesHint
Reference Chapter:1.11.
-
Question 78 of 673
78. Question
1 pointsQID1511:Which of the following are some requirements imposed on a corporate trustee by the Mandatory Provident Fund Schemes Authority (MPFA)?
I. It must have paid-up share capital of at least HKD100 million.
II. It must hold net assets of at least HKD150 million.
III. Its directors and Chief Executive must have at least 3 years relevant experience, and the Chief Executive must ordinarily reside in Hong Kong.
IV. Its day-to-day business must be conducted in Hong Kong and its records kept in Hong Kong.Correct
Only authorised financial institutions and registered trust companies that meet the specified
criteria are eligible to act as custodians, provided in each case they have a sufficient presence and control in Hong Kong. The specified criteria are primarily concerned with the financial standing of the entity, such as the amount of paid-up share capital and its net assets.Incorrect
Only authorised financial institutions and registered trust companies that meet the specified
criteria are eligible to act as custodians, provided in each case they have a sufficient presence and control in Hong Kong. The specified criteria are primarily concerned with the financial standing of the entity, such as the amount of paid-up share capital and its net assets.Hint
Reference Chapter:1.11.10
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Question 79 of 673
79. Question
1 pointsQID1512:Which of the following activities relating to the marketing of Mandatory Provident Fund (MPF) schemes would trigger the licensing requirement for Type 4 regulated activity (advising on securities)?
I. Comparing advantages and disadvantage of investing in different underlying products and investments.
II. Commenting on the performance, merits and demerits of specific securities relating to MPF products.
III. Advising on the structure of an MPF scheme in relation to the long term objectives of a potential participant.
IV. Giving generic advice on a constituent fund of an MPF scheme that does not include detailed advice on underlying
investments.Correct
The issue of an advertisement, invitation or document authorised by the SFC under the provisions of the SFO will not constitute a regulated activity for the purposes of the MPFSO. However, where such an advertisement, invitation or document is issued but is not authorised by the SFO, an offence under the SFO is committed that is punishable by imprisonment and/or a fine whether or not the person in question is a registered MPF intermediary.
Incorrect
The issue of an advertisement, invitation or document authorised by the SFC under the provisions of the SFO will not constitute a regulated activity for the purposes of the MPFSO. However, where such an advertisement, invitation or document is issued but is not authorised by the SFO, an offence under the SFO is committed that is punishable by imprisonment and/or a fine whether or not the person in question is a registered MPF intermediary.
Hint
Reference Chapter:1.11.21
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Question 80 of 673
80. Question
1 pointsQID1618:If there is any infraction in a licensed corporation, which of the following persons is responsible for making a report to the SFC?
Correct
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(l) reporting to the SFC on discovery of any breaches of The Code of Conduct.Incorrect
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(l) reporting to the SFC on discovery of any breaches of The Code of Conduct.Hint
Reference Chapter:1.11.37
-
Question 81 of 673
81. Question
1 pointsQID1603:Which of the following products are not being traded on the SEHK?
Correct
Treasury Bill are not being traded on the SEHK
Incorrect
Treasury Bill are not being traded on the SEHK
Hint
Reference Chapter:1.2.
-
Question 82 of 673
82. Question
1 pointsQID179:The principal ordinance applicable to the asset management industry is the
Correct
The principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.Incorrect
The principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.Hint
Reference Chapter:1.2.1
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Question 83 of 673
83. Question
1 pointsQID1035:The Securities and Futures Ordinance (SFO) is the principal legislative document governing which markets in Hong Kong?
Correct
The SFO is the principal legislative document governing the securities market in Hong Kong.
Incorrect
The SFO is the principal legislative document governing the securities market in Hong Kong.
Hint
Reference Chapter:1.2.1
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Question 84 of 673
84. Question
1 pointsQID332:According to the Securities and Futures Ordinance, which of the following definitions of a futures contract?
I. One party agrees to deliver to the other party at an agreed
future time an agreed property, or an agreed quantity of a property, at an agreed price.
II. The buyer agrees to deliver to the seller at an agreed future time an agreed quantity of a property, at an agreed price. The
buyer reserves the right not to carry out the contract and the seller must act in compliance to the wishes of the buyer.
III. The parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factors stands at a higher or lower level, than a value or level agreed at the time of making of the contract.
IV. The parties will make an adjustment between them at an agreed future time according to the agreed value of the agreed property at the time of making the contract; there should be no increase or decrease.Correct
According to Schedule 1, SFO, a futures contract means:
(a) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price and;
(b) That the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price and;
(b) That the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Hint
Reference Chapter:1.2.10
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Question 85 of 673
85. Question
1 pointsQID333:Which of the following activities is not a case of Type 2 or Type 5 Activities?
Correct
Any activities that are not conducted on behalf of others cannot be a regulated activity.
Incorrect
Any activities that are not conducted on behalf of others cannot be a regulated activity.
Hint
Reference Chapter:1.2.10
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Question 86 of 673
86. Question
1 pointsQID746:A type 1 license will also enable the licensee to conduct which of the following categories?
I. Type 4 activity wholly incidental to Type 1
II. Type 5 activity wholly incidental to Type 1
III. Type 6 activity wholly incidental to Type 1
IV. Type 9 activity wholly incidental to Type 1Correct
Regulated activities 4, 6 or 9 will be permitted if wholly incidental to Type 1.
Incorrect
Regulated activities 4, 6 or 9 will be permitted if wholly incidental to Type 1.
Hint
Reference Chapter:1.2.10
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Question 87 of 673
87. Question
1 pointsQID2682:If a solicitor is conducting a Type 4 acitivity, should he/she apply for a licence?
Correct
As long as its wholly incidental to his/her professional capacity, solicitors are not require to apply for a licence for conducting Type 4,5,6,9 activities.
Incorrect
As long as its wholly incidental to his/her professional capacity, solicitors are not require to apply for a licence for conducting Type 4,5,6,9 activities.
Hint
Reference Chapter:1.2.10
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Question 88 of 673
88. Question
1 pointsQID344:The SFC’s codes and guidelines on asset management are UNLIKELY to be applicable to which of the following activities?
Correct
Margin financing is not an activity directly related with asset management, so regulations and guidelines associated with asset management will not cover those kinds of transactions.
Incorrect
Margin financing is not an activity directly related with asset management, so regulations and guidelines associated with asset management will not cover those kinds of transactions.
Hint
Reference Chapter:1.2.10
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Question 89 of 673
89. Question
1 pointsQID1571:Which of the following activities are not considered as securities or futures contracts management?
I. An accountant managing a portfolio of securities for a group of people.
II. A staff member of a firm managing securities or futures contracts for a subsidiary of his/her company.
III. A staff member of a firm managing securities or futures contracts for a JV of the company’s majority shareholder and the company’s director.
IV. A solicitor withholding a portfolio of securities for clients wholly incidental to his professional capacity.Correct
Option I did not specify that the accountant is working in his professional capacity, therefore should not be exempted.
This is defined as managing a portfolio of securities or futures contracts for another person by a person other than certain excluded persons. Persons specifically excluded from the definition of securities or futures contracts management include the following:
(a) corporations that carry on securities or futures contracts management solely for their
wholly owned subsidiaries, their holding companies which hold all their issued shares,
or other wholly owned subsidiaries of the latter;
€ solicitors, counsel (barristers), professional accountants and trustees who provide securities or futures contracts management services wholly incidental to their professional practices.Incorrect
Option I did not specify that the accountant is working in his professional capacity, therefore should not be exempted.
This is defined as managing a portfolio of securities or futures contracts for another person by a person other than certain excluded persons. Persons specifically excluded from the definition of securities or futures contracts management include the following:
(a) corporations that carry on securities or futures contracts management solely for their
wholly owned subsidiaries, their holding companies which hold all their issued shares,
or other wholly owned subsidiaries of the latter;
€ solicitors, counsel (barristers), professional accountants and trustees who provide securities or futures contracts management services wholly incidental to their professional practices.Hint
Reference Chapter:1.2.10
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Question 90 of 673
90. Question
1 pointsQID331:Which of the following descriptions of futures are CORRECT, as defined in the Securities and Futures Ordinance (SFO)?
I. Future contracts are agreements made between the buyer and seller.
II. Future contracts are made based on the future prices of securities.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of property, at an agreed price.
IV. The traded products of futures contracts are not securities.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
(b) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
(b) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.10
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Question 91 of 673
91. Question
1 pointsQID1001:Under which of the following circumstances does a Type 2 licenced person or registered person need to acquire a Type 5 licence or registration?
Correct
Provide futures dealing advice to clients and charge separately is not a type 5 regulated activity that is wholly incidental to type 2 regulated activity. Therefore, registration or licence for type 5 regulated activity is required.
Incorrect
Provide futures dealing advice to clients and charge separately is not a type 5 regulated activity that is wholly incidental to type 2 regulated activity. Therefore, registration or licence for type 5 regulated activity is required.
Hint
Reference Chapter:1.2.10
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Question 92 of 673
92. Question
1 pointsQID2599:Which of the following activity is considered as asset management?
I. Accountants manage securities and futures portfolios for their friends and charge “tips”.
II. Trading companies manage securities and futures portfolios for their wholly-owned subsidiaries.
III. Trading companies manage securities and futures portfolios for their 60%-owned subsidiaries.
IV. Licensed corporations provide their customers who engage in securities trading with securities portfolio management wholly incidental to securities trading services.Correct
Accountants manage securities and futures portfolios for their friends and charge “tips”. Since it’s not wholly incidental to professional activities of accountants, it’s not excluded. As for trading companies managing securities and futures portfolios for their 60%-owned subsidiaries, since the subsidiaries are not wholly-owned, it’s not excluded. Since both are not excluded, they are asset management activities.
Incorrect
Accountants manage securities and futures portfolios for their friends and charge “tips”. Since it’s not wholly incidental to professional activities of accountants, it’s not excluded. As for trading companies managing securities and futures portfolios for their 60%-owned subsidiaries, since the subsidiaries are not wholly-owned, it’s not excluded. Since both are not excluded, they are asset management activities.
Hint
Reference Chapter:1.2.10
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Question 93 of 673
93. Question
1 pointsQID326:Which of the following are defined as Securities under s. 392, SFO as securities?
I. CISs
II. Bonds
III. Stocks
IV. Other interests prescribed by the Financial SecretaryCorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments, including:
(a) shares, stocks, debentures, loan stocks, funds, bonds or notes;
(d) interests in CISs;
(f) interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments, including:
(a) shares, stocks, debentures, loan stocks, funds, bonds or notes;
(d) interests in CISs;
(f) interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.Hint
Reference Chapter:1.2.11
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Question 94 of 673
94. Question
1 pointsQID327:The definition of “securities” is extensive and includes
I. Shares, Bonds, Debentures
II. Interests, rights in collective investment schemes
III. Ownership of investment linked Insurance schemes
IV. Interest in any CISsCorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Option III (Investment linked Insurance Scheme) is not covered by this definition.
Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Option III (Investment linked Insurance Scheme) is not covered by this definition.
Hint
Reference Chapter:1.2.11
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Question 95 of 673
95. Question
1 pointsQID1227:Which of the following entities can prescribe other arrangements on security by notice under s. 393 SFO?
Correct
Interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.
Incorrect
Interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.
Hint
Reference Chapter:1.2.12
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Question 96 of 673
96. Question
1 pointsQID222:Which of the following agencies or individuals may prescribe, by notice in the Gazette, new financial products as being (or not being) securities or futures contracts?
Correct
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Incorrect
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Hint
Reference Chapter:1.2.12
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Question 97 of 673
97. Question
1 pointsQID2428:According to the Securities and Futures Ordinance, which of the following is not securities?
Correct
According to the Securities and Futures Ordinance, futures options belongs to futures.
Incorrect
According to the Securities and Futures Ordinance, futures options belongs to futures.
Hint
Reference Chapter:1.2.12
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Question 98 of 673
98. Question
1 pointsQID325:Which of the following are not examples of securities?
I. Shares in a private company
II. Shares in a public company
III. Interests in CISs that are either registered mandatory
provident fund schemes under MPFSO, occupational
retirement schemes under ORSO
IV. Contracts of insurance in relation to any class of insurance
business under the Insurance Companies Ordinance (“ICO”).Correct
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Options I, III and IV are not covered by this definition.
Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Options I, III and IV are not covered by this definition.
Hint
Reference Chapter:1.2.12
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Question 99 of 673
99. Question
1 pointsQID2716:Which of the following may amend what is regulated activity by Gazette?
Correct
The Financial Secretary shall amend by the Gazette what is a regulated activity.
Incorrect
The Financial Secretary shall amend by the Gazette what is a regulated activity.
Hint
Reference Chapter:1.2.12
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Question 100 of 673
100. Question
1 pointsQID970:Which of the following are examples of security?
I. Listed Stocks
II. Equity Warrants
III. Derivative Warrants
IV. BondsCorrect
A security is a tradable financial asset. The term commonly refers to any form of financial instrument including stocks, bonds and warrants.
Incorrect
A security is a tradable financial asset. The term commonly refers to any form of financial instrument including stocks, bonds and warrants.
Hint
Reference Chapter:1.2.12
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Question 101 of 673
101. Question
1 pointsQID35:Which of the following is responsible for authorizing and supervising Insurance Companies?
Correct
The Insurance Authority is concerned with the regulation of insurance companies and insurance intermediaries.
Incorrect
The Insurance Authority is concerned with the regulation of insurance companies and insurance intermediaries.
Hint
Reference Chapter:1.2.13
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Question 102 of 673
102. Question
1 pointsQID347:Which of the following types of interests in Collective Investment
Schemes (CISs) are not considered as securities?
I. A registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund.
II. An occupational retirement scheme under the ORSO
III. A contract of insurance in relation to any class of insurance business under the Insurance Companies Ordinance.
IV. Real estate investments management as stipulated in the Securities and Futures Ordinance.Correct
The definition of asset management speaking of managing
“securities”, is specifically includes interests in any CIS; but does not include any interest in a CIS that is:
(a) a registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund;
(b) an occupational retirement scheme under the ORSO; or
© a contract of insurance in relation to any class of insurance business under the Insurance Ordinance.Incorrect
The definition of asset management speaking of managing
“securities”, is specifically includes interests in any CIS; but does not include any interest in a CIS that is:
(a) a registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund;
(b) an occupational retirement scheme under the ORSO; or
© a contract of insurance in relation to any class of insurance business under the Insurance Ordinance.Hint
Reference Chapter:1.2.13
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Question 103 of 673
103. Question
1 pointsQID771:Which of the following correctly describe the characteristics of futures contracts?
I. Futures contracts must be settled at a designated time and at a designated price agreed by both parties in the future.
II. The parties of the futures contracts are obliged to settle the contracts.
III. Futures contracts made under the rules or conventions of a futures market.
IV. The delivery of a futures contract can be delayed if both parties of the contract come to an agreement.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market; also
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
In such contracts, one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market; also
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
In such contracts, one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.14
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Question 104 of 673
104. Question
1 pointsQID2378:According to the Securities and Futures Ordinance, a futures contract is that:
I. Futures in Hong Kong has to be settled physically.
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.
IV. In Hong Kong, both parties of futures contract can agree to delay the settlement.Correct
According to the Securities and Futures Ordinance, a futures contract is that:
I. can be either cash settlement or
physical delivery
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to the Securities and Futures Ordinance, a futures contract is that:
I. can be either cash settlement or
physical delivery
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.14
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Question 105 of 673
105. Question
1 pointsQID1000:According to the SFO, the definition of Futures contracts is
Correct
According to the SFO, the definition of Futures contracts are contracts made under the rules or conventions of a futures market.
Incorrect
According to the SFO, the definition of Futures contracts are contracts made under the rules or conventions of a futures market.
Hint
Reference Chapter:1.2.14
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Question 106 of 673
106. Question
1 pointsQID221:What are the powers of the Financial Secretary in relation to securities and CISs?
Correct
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Incorrect
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Hint
Reference Chapter:1.2.14
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Question 107 of 673
107. Question
1 pointsQID772:Which of the following correctly describe the characteristics of futures contracts?
I. Futures contract must be settled at a designated time and at a designated price agreed by both parties in the future.
II. The parties trading futures contracts must pay margin to the clearing house (HKCC).
III. Futures contracts of stocks traded on SEHK must be physically settled.
IV. Futures contracts must be traded at the exchange.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
Contracts determine:
(i) that one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price; or
(ii) that the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
Contracts determine:
(i) that one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price; or
(ii) that the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Hint
Reference Chapter:1.2.14
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Question 108 of 673
108. Question
1 pointsQID627:How do CISs and asset management relate to each other in the SFO regime?
I. The definition of asset management includes “securities” as a class of assets which may be managed under Type 9 regulated activity. The definition of securities includes CISs.
II. Asset management has no relation with CIS in the SFO regime
III. CISs is the only form of authorised asset management.
IV. CISs is one aspect of asset management activity in Hong KongCorrect
Option II and III are incorrect since CIS are indeed considered an asset management activity by the SFO, but they are not the ONLY form of asset management recognized by the SFO.
Incorrect
Option II and III are incorrect since CIS are indeed considered an asset management activity by the SFO, but they are not the ONLY form of asset management recognized by the SFO.
Hint
Reference Chapter:1.2.15
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Question 109 of 673
109. Question
1 pointsQID622:Which of the following are key elements of a Collective Investment Scheme (CIS)?
I. an arrangement in respect of property under which the management of the property is not subject to the day-to-day control of the scheme’s participants
II. an arrangement in respect of property under which the management of the property is subject to the day-to-day control of the scheme’s participants
III. The purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.
IV. The purpose of the arrangement is to enable the managers of the scheme to receive profits, income or other payments or returns from the property or dealings relating to it.Correct
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.Incorrect
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-t