英文證券卷八 HKSI Paper 8 第一章

Correct descriptions of China’s A or B shares include
I. A shares are settled in renminbi
II. B shares are settled in Hong Kong dollars in Shenzhen
III. B shares are settled in US dollars in Shanghai
IV. B shares in Shenzhen and Shanghai were initially available only to foreign investors, but have now been opened up to domestic investors with a foreign exchange account

Malaysian has minor trade relations with Hong Kong. Besides, Malaysian stock market has the smallest market cap among the above options and hence has lesser influence on the global market.

B shares traded in the Shenzhen Stock Exchange are denoted in Hong Kong dollars

Real interest rate = (1+nominal interest rate)/ (1+inflation rate) -1
But these questions can be answered even without a calculator. Since real interest rate is approximately nominal interest rate minus inflation rate, the real interest rate must be positive in this case, so A and B can be eliminated. Although the simple calculation method is 4%-2%, the question emphasizes the MOST ACCURATE, so the answer should be less than 4%-2% by using the most accurate formula. Therefore, the answer is C

Present value x (1 is the principal itself + annual interest rate x number of days/365 days in a year) = face value
970x (1+ n% x 60/365) = 1000
1 + n% x 60/365 = 1000/970
n% x 60/365 = 1.03093-1
n% = 0.03093 x 365/60
n%= 0.18814

Principal x (1 + annual interest rate/number of days per year) ^ interest calculation several times-principal
Tomorrow, interest is given once (1 time a day)
10,000,000x(1+7%/365)^1 – 10,000,000
= 10,000,000×1.000191781 – 10,000,000
= 1917.8082

The inverse yield curve indicates that the short-term interest rate is higher than the long-term interest rate, which means that in the future, interest rate will fall

QDIIs refers to Mainland Chinese investors who are permitted to invest in overseas financial markets, such as fund houses, banks, insurance companies and securities brokerage firms

The Hang Seng Composite Index Series covers the top 95% of the market value of shares listed on the main board of the exchange which has a wider range than the other two HSIs
The S & P / HKEx Large Cap Index covers only dozens of stock

To approximate financial instrument’s real interest rate: nominal interest rate – inflation

When the long-term interest rate is smaller than the short-term interest rate, it means that the yield curve is reversed. It probably represents decreased inflation and economic downturn. The government may implement expansionary monetary policies to drive down the interest rate.

A decrease in the exchange rate leads to the weakening of the currency of a country. To foreign consumers, the products exporting from the nation become cheaper. It may strengthen the export of a country rather than weakening.

The Hang Seng Composite Index (“HSCI”) covers the highest 95% of market value on the Mainboard of the exchange.

There is a deposit of 10000 with a term of 5 years and an interest of 6%. Assuming the interest is not reinvested, the sum of interest in 5 years is:
Principal*terms*interest
10000*5*6%=$3000

With its consistent budget surplus, the HKSAR Government does not have any need to raise capital by issuing debts. Thus, Hong Kong’s debt market has historically been illiquid and inactive when compared to its equity markets.

To develop the debt market, the Hong Kong Monetary Authority (“HKMA”) issues a number of debt securities on behalf of the HKSAR Government including Exchange Fund Bills (“EFBs”) and Exchange Fund Notes (“EFNs”). To enhance secondary market liquidity, the HKMA has established an effective market-making system for EFBs and EFNs. There are currently no restrictions on foreign borrowers issuing and investing in the Hong Kong debt market, which has resulted in its internationalization. In an effort to appeal to retail investors and to encourage the development of Hong Kong’s debt market, some debt securities, EFNs and government bonds have been listed on the SEHK.

The higher the credit risk of the issuer, the higher the yield theoretically. The yield of supranational institutions is lower than England and America, whereas quasi-government entities are higher than the above. As a result, the yield of quasi-government entities is the highest in theory.

A positive yield curve means the long-term yield is higher than short-term yield, and it is expected that the inflation will become worse in the future.

To develop the debt market, the Hong Kong Monetary Authority (“HKMA”) issues a number of debt securities on behalf of the HKSAR Government including Exchange Fund Bills (“EFBs”) and Exchange Fund Notes (“EFNs”) .

=8.019

Thus, the return is 801.9%

Nominal interest rates are the most common way of quoting annual interest rates, without considering the compounding effect. Real interest rates take into account changes in the purchasing power of money over time, i.e. inflation. Therefore, nominal interest rates are the sum of real returns and inflation rate.

Positive, or normal: this is the normal situation where yield increases with an increase in the term to maturity. The longer the term to maturity, the greater the uncertainty and therefore the greater the risk. Yields on securities therefore increase to reflect this greater risk for investors. A positive yield curve is consistent with expectations of rising inflation over the longer term.

Hong Kong Exchanges and Clearing Limited (“Hex”) was listed its shares on the SEHK on 27 June 2000.

Main board listing: this refers to the main group of publicly listed companies with proven profitability records and size to justify being publicly listed. An example is the Main Board of the SEHK.

Shenzhen Stock Exchange was established in December 1990, and also trades in A and B shares. A shares are traded and settled in the local currency (i.e. RMB) and B shares in Hong Kong dollars.

In 1998, the government passed new securities laws to govern the emerging securities market, aiming to increase the levels of disclosure and to prevent insider trading.

London is still the largest stock market in Europe and its total market capitalisation at the end of June 2016 was USD 3,480 billion. The Financial Times Stock Exchange (“FTSE”) 100 Index tracks the performance of the London stock market’s top 100 shares and is the most common performance indicator for the UK equity market.

The component above the risk-free rate, the risk premium, represents the additional reward to investors for investing in higher risk securities.

Duration measures the sensitivity of securities to changes in interest rates, by taking into account the maturity date and the coupon cash flows. It approximates to the percentage bond price change that results from a 1% change in interest rates. It also measures the average number of years it takes for the discounted cash flow to be returned to an investor.

All factors above affects the security market.

Nominal interest rate = Real Interest rate + Inflation rate

4-8 = -4

The real interest rate in Hong Kong is -4%.

Nominal interest rate = Real Interest rate + Inflation rate

4-8 = -4

The real interest rate in Hong Kong is -4%.

The interest payment or coupon on a fixed rate bond remains constant throughout the life of the bond while interest payment or coupon of a floating rate bond is based on a reference rate. If there will be a huge increase in Hong Kong’s interest rate, The interest payment on a fixed rate bond remains unchanged but that on a floating rate bond may increase. Therefore, he will benefit from the increased returns resulting from higher interest rates after selling sell 10-year and 30-year fixed-rate bond and purchasing floating-rate bond.

An increase in short-term interest rates results in a decrease in the value of long-term debt securities. Since 30-year bond is longer than 10-year bond, it will drop more when short-term interest rates increases.

S=P(1+r/m)^(tm)
500000=P(1+0.05/2)^(2X2)
P=4529753
Thus, Mr. Zhou need to invest $452,975.

Simple interest involves interest being calculated on a constant principal amount throughout the period of the loan. Compound interest assumes that all income earned in a period is reinvested at the same interest rate so that for each succeeding period that the interest is calculated, the principal amount has increased by the amount of interest earned up to the end of the previous period.

Real interest rate =[(1+0.05/12)^12]-1 = 0.0512

Thus, the real interest rate is 5.12%

Real interest rate =[(1+0.05/2)^2]-1=0.0506

Thus, the real interest rate is 5.06%

Real interest rate for the daily payment:
[(1+0.475/365)^365]-1 = 0.608

Thus, the real interest rate is 60.8% and it exceeds the legal interest rate limit.

Future value:

20000(1×0.06)^5
=26764

Thus, the future value is $26,764.

500000(1+0.3)^5 = 1856465

Mr. Zhou will have $1,856,465 after 5 years.

1856465-500000 = 1,356,465

Mr. Zhou will have $1,856,465 after 5 years.

500000[(1+(0.3/2)]^(5×2)= 2022778.868

Mr. Zhou will have $2,022,779 after 5 years.

When the yield curve is upward-sloping, the curve is showing the positive or normal one. This is the normal situation where yield increases with an increase in the term to maturity. The longer the term to maturity, the greater the uncertainty and therefore the greater the risk. The investors require additional risk premium and the yields on securities therefore increase to reflect this greater risk for investors.

Generally, the longer the term to maturity, the greater the uncertainty and therefore the greater the risk. The investors require additional risk premium and the yields on securities therefore increase to reflect this greater risk for investors.

The lower the credit risk of fixed income securities, the lower the risk premium. Thus, the additional yields on securities will also become lower in fixed income securities with low credit risk.

When short-term rate is lower than long-term rate, the yield curve is positive or normal. This is the normal situation where yield increases with an increase in the term to maturity. There is thus an upward-sloping yield curve.

A flat yield curve reflects market expectations that interest rates will remain stable in the future. There is a horizontal yield curve.

Downward-sloping yield curve represents the negative, or inverse yield curve. An inverse yield curve reflects a situation where short-term interest rates are higher than long-term interest rates.

An inverse yield curve reflects a situation where short-term interest rates are higher than long-term interest rates. This may indicate that there are expectations of falling interest rates in the future. In other words, investors require additional risk premium in borrowing short-term debt in this situation.

An inverse yield curve reflects a situation where short-term interest rates are higher than long-term interest rates. This may indicate that there are expectations of falling interest rates in the future.

The component above the risk-free rate, the risk premium, represents the additional reward to investors for investing in higher risk securities. Risk premium = yield(Required return) – rise-free rate

The first reported trading of equity securities in Hong Kong dates back to the mid 19th century. In 1891, the first formalized stock exchange, the Association of Stockbrokers in Hong Kong, was established. This was renamed the Hong Kong Stock Exchange in 1914.

There are generally two tiers of listing: (1) Main board listing: this refers to the main group of publicly listed companies with proven profitability records and size to justify being publicly listed. An example is the Main Board of the SEHK. (2) Second board listing: this generally caters for smaller companies that do not qualify for main board listing. An example is the Growth Enterprise Market (“GEM”) in Hong Kong.

The objectives of the SFC in relation to the securities and futures industry, as stated in the SFO, are to: (1) maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the industry; (2) promote understanding by the public of financial services including the operation and functioning of the industry; (3) provide protection to the investing public; (4) minimize crime and misconduct in the industry; (5) reduce systemic risks in the industry; and (6) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.

A stock market index represents the average price movement in a sample of shares traded on the stock market. If the price of stock index rises, the average price of stocks in the index rises for sure.

Due to the linked exchange rate system, the interest rate on Hong Kong dollars is affected by the interest rate on US dollars rather than the interest rate on RMB.

Due to the linked exchange rate system, the interest rate on Hong Kong dollars is affected by the interest rate on US dollars rather than the interest rate on RMB.

Government purchasing bonds increase the funds in the market which worsens inflation rather than deflation. An increase in the oil price will worsen the inflation rather than deflation. Foreign funds coming in will worsen the inflation rather than deflation. An appreciation of the currency leads to a decrease in the price of imported goods which may cause deflation.

Sum of principal and interest = principal*(1+annual interest)^term
Sum of principal and interest = 10000*(1+4%)^2
Sum of principal and interest = 10816

interest = principal*(1+annual interest)^term – principal
interest = 10000*(1+4%)^2-10000
interest = 10816-10000
interest = 816

A negative yield curve represents that short-term interest rate is higher than long-term interest rate. It is expected that the interest rate will drop and the government impose an expansionary monetary policy. Therefore, you should buy long-term bonds or bond portfolios with extended terms.

A positive yield curve represents that the short-term interest rate is lower than long-term interest rate. It is expected that the interest rate will increase and the government imposes a contractionary monetary policy. Therefore, you should not buy long-term bonds or bond portfolios with extended terms.

China-Affiliated Corporations mean that the funds of the enterprises come from China but are registered in Hong Kong or overseas.

China Enterprises mean that the funds of the enterprises come from China and are registered in China at the same time.

The H Shares are shares issued by companies incorporated in the Mainland of China and which listed on the SEHK. Also, anyone can become H-share company’s major shareholder.

Bonds with longer term are more sensitive to interest rate than those with short term. It is because long-term bonds have longer maturity date and the attraction of each dividend drops when the interest rate rise. Therefore, the price decline effectively. Short-term bonds have short maturity date and there is less effect of the increasing interest rate on the each dividend.

The Dog Charity Fund should rebalance his portfolio by reducing the weighting of floating rate bonds and increasing that of fixed rate bonds. In this way, it will benefit from the increased returns resulting from higher interest rates when the interest rate decreases.

S&P 500 can best represent the US stock market.

Principal x (1 + annual interest rate/how many times the interest is calculated annually) ^ (remaining period x how many times the interest is calculated annually)-principal = interest
100,000 x (1 + 0.04/2) ^ (3×2) -100,000
= $12,616.2419

Inflation refers to the tendency for prices to continue to rise over a period of time, resulting in a decrease in the purchasing power of money – more money is needed to purchase the same value of goods and services.

50000 x (1+0.1 x 3)
=65000

$65000 interest and principal will receive in three years

15000 x 1 x 0.0475
=712.5

Mr. Gao can receive $712.5 after one year.

Mr. GAO can receive $165913.5 interest after three years.

500000 / (1+10%) = 454545

Miss Fung should provide $454545 to Mr. Ma.

500000 (1+10%) / (1+10%) = 500000

Miss Fung should provide $500000 to Mr. Ma.

Interest rate can be classified as nominal interest rate and official interest rate.

Nominal interest rates is the most common way of quoting annual interest rates, without considering the compounding effect. Real interest rates take into account changes in the purchasing power of money over time, i.e. inflation.

Negative interest rate refers to the rate of inflation higher than nominal interest rates of the bank deposit, the price index (CPI) rapid rise resulting in the real bank deposit interest rate is actually negative.

A negative yield curve is consistent with expectations of falling inflation (or disinflation) over the longer term.

A positive yield curve is consistent with expectations of rising inflation over the longer term.

In the situation where short-term interest rates are higher than long-term interest rates, there are expectations of falling interest rates in the future.

High inflation leads to an increase in interest rate and the borrowing cost of companies increases. Therefore, the profit of the companies is affected by the increasing cost.

Nominal interest rate = Real Interest rate + Inflation rate

Real Interest rate = 7% -3% = 4%

The real interest rate is 4%.

The yields of long-term bond increase when the long-term rate rises. The higher the yield, the lower the price. Thus, the price of long-term bond drops when the long-term rate rises.

When there are overheating in the economy and inflation, it is likely that the government would institute a contractionary monetary policy by increasing short-term interest rates and discouraging spending.

The introduction of the Government Bond cannot be classified as political factor.

Hong Kong has adopted a linked exchange rate regime, which is a variant of the fixed rate regime where the Hong Kong dollar is linked to the US dollar.

Hong Kong has adopted a linked exchange rate regime, which is a variant of the fixed rate regime where the Hong Kong dollar is linked to the US dollar. Thus, the US interest rate affect HK interest rate and the attraction of HK stock market to foreigner directly.

The HKD is linked to the USD through the Currency Board system. Any change in the US interest rates (and therefore the value of the USD) will influence interest rates in Hong Kong and the value of the HKD against other currencies. Thus, the performance of US and HK stock markets have positive relationship.

Any changes in the US economy will therefore be reflected in its levels of trade and investment, which in turn affects Hong Kong’s levels of trade and investment and the value of the HKD.

Index and futures are made with reference to two different benchmarks. Thus, it cannot be hedged by using futures.

A share and B share are traded in the Shanghai Stock Exchange(SSE).

A share and B share are traded in the Shenzhen Stock Exchange(SZSE).

A share and B share are traded in the Shenzhen Stock Exchange(SZSE) and the Shanghai Stock Exchange(SSE).

Shanghai-Hong Kong Stock is open to all Hong Kong and foreign investors, including institutions and individuals. Shanghai-Hong Kong Stock can be traded include the 180 index, the SSE 380 index constituent stocks, and the Shanghai Stock Exchange listed A + H shares of the company stock.

The US economy has a significant impact on Hong Kong’s economy because it is a major trading and investment partner, and also because the HKD is linked to the USD and hence the strength or weakness of the USD will affect the trade relations of Hong Kong with other trading partners.

A decrease in interest rates will result in lower rates from lending institutions, and borrowers – for example, households or businesses – therefore have lower loan interest to pay. This results in borrowers effectively having higher disposable incomes, which may increase consumer and business investment, which in turn leads to stock price increases.

An increase in interest rates by institutions will increase borrowers’ loan interest and therefore effectively lower their disposable incomes. This results in investment in the economy, which could lead to capital market slowdown.

A change in short-term interest rates set by the central bank results in authorized banks adjusting interest rates accordingly. Thus, interest rate reflects borrowing cost.

When the interest rates rises, the borrowing cost of borrower increases correspondingly. This results in borrowers effectively having lower disposable incomes, the profit of the corporations decreases and the cost of expanding the business of corporations will increase.

Often news is pre-empted in the market (i.e. market expectations) and as a result the expected impact has already been factored into the prices of securities.
The relation between interest rate and the stock price is negatively correlated and thus the unexpected increase in interest rate has a bad impact on the stock price.

The US economy has a significant impact on Hong Kong’s economy because it is a major trading and investment partner, and also because the HKD is linked to the USD and hence the strength or weakness of the USD will affect the trade relations of Hong Kong with other trading partners. Any changes in the US economy will therefore be reflected in its levels of trade and investment, which in turn affects Hong Kong’s levels of trade and investment and the value of the HKD.

There are other global and regional economic factors that affect Hong Kong’s financial markets. Some of the major economic factors include the stability of regional economies and currencies and free trade versus tariffs/quotas.

The US economy has a significant impact on Hong Kong’s economy because it is a major trading and investment partner, and also because the HKD is linked to the USD and hence the strength or weakness of the USD will affect the trade relations of Hong Kong with other trading partners. Any changes in the US economy will therefore be reflected in its levels of trade and investment, which in turn affects Hong Kong’s levels of trade and investment and the value of the HKD.

Because global investment portfolios are large, they can have a significant impact on the volume, pricing and direction of international capital flows, and on regulatory and stability conditions in both domestic and international markets. In addition, international capital flows can be very volatile in nature, with a tendency to reverse direction when there is the slightest hint of risk or concern over the fragility of the financial sector. Globalization can result in global instability.

The interest payment or coupon on a fixed rate bond remains constant throughout the life of the bond while interest payment or coupon of a floating rate bond is based on a reference rate. If there will be a huge increase in Hong Kong’s interest rate, The interest payment on a fixed rate bond remains unchanged but that on a floating rate bond may increase. Therefore, he will benefit from the increased returns resulting from higher interest rates after selling fixed-rate bond and purchasing floating-rate bond.

Qualified Domestic Institutional Investors (“QDIIs”) and Qualified Foreign Institutional Investors (“QFIIs”) are introduced in China in 2002. QDIIs are local institutional investors (such as fund houses, banks, insurance companies and securities brokerages) in Mainland China who have been granted permission to invest in overseas financial markets, while QFIIs are foreign institutional investors who are allowed to invest in China A shares. These have an impact on the flow of funds in the market. Investment by QFIIs, for instance, has a positive impact
on the flow of funds into the country.

The HSI was publicly launched on 24 November 1969 (the HSI was set to 100 on 31 July 1964 as the base date) and was designed as a barometer of share price movements on the Hong Kong stock market.

From 11 September 2006, the calculation methodology of the HSI was also changed from the full market capitalisation weighted approach to a free float-adjusted market capitalisation weighted approach 14 (to reflect strategic holdings), with a capping level on the weighting of individual stocks in the HIS.

The HSI was publicly launched on 24 November 1969 (the HSI was set to 100 on 31 July 1964 as the base date) and was designed as a barometer of share price movements on the Hong Kong stock market. The HSI was publicly launched on 24 November 1969 (the HSI was set to 100 on 31 July 1964 as the base date) and was designed as a barometer of share price movements on the Hong Kong stock market.

The 50 stocks included in the index are selected according to the following criteria: they must belong to the top 90% of the total market value (expressed as an average of the past 12 months) of all eligible shares listed on SEHK; they must belong to the top 90% of the total turnover (aggregated and individually assessed for eight quarterly sub-periods over the past 24 months) of all eligible shares listed on SEHK; and they should normally have a listing history of 24 months or meet the requirements of the Guidelines for Handling Large-cap Stocks Listed for Less Than 24 Months shown below.

Aggregated market capitalisation weighted approach uses the following formula to calculate the level of an index:
Current Index = (today’s current aggregate market capitalisation of constituent stocks / yesterday’s closing aggregate market capitalisation of constituent stocks x yesterday’s closing index

Today’s current index = ( 100 x 10 + 100 x12 + 200 x 10) / ( 100 x 5 + 100 x6 + 200 x 5) x 150 = 300

The Hang Seng Composite Index (“HSCI”) covers about the top 95th percentile of the market capitalisation of the stocks listed on the Main Board of SEHK. The HSI comprised 50 stocks, whose aggregate capitalisation accounted for approximately 56.7% of the total market capitalization. Therefore, when the Hang Seng Composite Index increases more than HIS, this represents the price of constituent stocks increase less than others.

The Hang Seng Composite Index (“HSCI”) covers about the top 95th percentile of the market capitalisation of the stocks listed on the Main Board of SEHK. The HSI comprised 50 stocks, whose aggregate capitalisation accounted for approximately 56.7% of the total market capitalization. Therefore, when the Hang Seng Composite Index increases less than HIS, this represents the price of constituent stocks increase more than others.

Aggregated market capitalisation weighted approach uses the following formula to calculate the level of an index:
Current Index = (today’s current aggregate market capitalisation of constituent stocks / yesterday’s closing aggregate market capitalisation of constituent stocks) x yesterday’s closing index

Today’s current index = ( 1000000 x 50 + 500000 x750000 + 200 x 25) / ( 1000000 x 52 + 500000 x70 + 750000 x 30) x 10000 = 10306

Since the establishment of the HSI in 1969, it has adopted a full market capitalisation weighted approach to calculate the index level. From 11 September 2006, the calculation methodology of the HSI was also changed from the full market capitalisation weighted approach to a free float-adjusted market capitalisation weighted approach 14 (to reflect strategic holdings), with a capping level on the weighting of individual stocks in the HIS.

The Hang Seng China Enterprises Index is reviewed quarterly and is calculated
with free float adjustment; no constituents can have a weighting exceeding 10%.

An downward-sloping yield curve is the negative, or inverse yield curve. A negative yield curve is consistent with expectations of falling inflation (or disinflation) over the longer term.

An upward-sloping yield curve is called normal/positive yield curve.

An downward-sloping yield curve is called negative/inverted yield curve.

Positive, or normal yield curve is the normal situation where yield increases with an increase in the term to maturity. The longer the term to maturity, the greater the uncertainty and therefore the greater the risk. Yields on securities therefore increase to reflect this greater risk for investors.

Negative, or inverse yield curve is the opposite scenario to the positive yield curve. An inverse yield curve reflects a situation where short-term interest rates are higher than long-term interest rates.

Local tax rate is not the main concern because fund is tended to invest in many other countries.

Simple interest = principal (1+the interest rate x period)

S =35,000 (1+0.06×10)
S =56,000

Thus,
Interests=56,000-35,000 = $21,000

Simple interest = principal (1+the interest rate x period)

S =35,000 (1+0.06×10)
S =56,000

1000000x(1+0.6 x t) = 25000000

t=40

40 years is needed.

1,000,000x(1+0.22 x t) = 25,000,000
t = (25000000/1000000 – 1) / 0.22
t = 109.09

109 years are needed.

The period of the loan is 10 years with seasonal compounding. Thus, there are 40 compound periods.

=7.5133

Thus, the return is751.33%

The period of the loan is 10 years with daily compounding. Thus, there are 3650 compound periods.

Exchanges were established in Shenzhen and Shanghai. The exchange facilitates
the trading of A shares, which are purchased by local Chinese investors. In 1998, the
government passed new securities laws to govern the emerging securities market, aiming to increase the levels of disclosure and to prevent insider trading. Also, China Securities Regulatory Commission is responsible to monitor China’s securities market.

Nominal return = real returns + inflation rate

Thus,
50% = real returns +9%

Real returns = 41%

Nominal return = real returns + inflation rate

Thus,
Nominal return = 10% +9%
Nominal return = 19%

The following assets can be traded at Stock Exchange of Hong Kong: Stock warrants; Derivative warrants; The Link Real Estate Investment Trust(The Link); The Tracker Fund of Hong Kong.

The HKD is linked to the USD through the Currency Board system. Any change in the US interest rates (and therefore the value of the USD) will influence interest rates in Hong Kong and the value of the HKD against other currencies. Therefore, local stock market will also be affected. QDII will affect the capital which invest in the local capital market.

Nominal interest rate = Real Interest rat + Inflation rate

3 + (-2) = 1

The nominal interest rate is 1%.

The interest rates of different plans：
[(1+10%/360)^360]-1 = 10.5%
[(1+11%/12)^12]-1 = 11.6%
[(1+12%/4)^4]-1 = 12.5%
[(1+13%/1)^1]-1 = 13%

Thus, the construction company should choose the plan with an annual interest rate of 10% with daily interest payment.

Thus, the real interest rate is 12.55%.

Nominal interest rate = Real Interest rate + Inflation rate

Real Interest rate is nominal interest rate minus inflation.

8% – 5% = 3%

Real Interest rate is 3%.

DJIA Price Index today=(120 + 300 + 200)/Divisor = 12220

Divisor = (120 + 300 + 200) /12220 = 0.0507364975450082

Two days later, DJIA Price Index = (150 + 330+ 180)/Divisor = 13,008

Current Index = (today’s current aggregate market capitalisation of constituent stocks / yesterday’s closing aggregate market capitalisation of constituent stocks) x yesterday’s closing index
2100/ 2000 x 10000 = 10500

Current Index = (today’s current aggregate market capitalisation of constituent stocks / yesterday’s closing aggregate market capitalisation of constituent stocks) x yesterday’s closing index

500 = (100×0.5+200×2) / (100×1+200×2) x 500

Thus, yesterday’s closing index = 450
So the index dropped 10%

Japan is a major economic power in Asia.

B shares are open to individual or institutional foreign investors and settled in US or HK dollars.

A shares are purchased by local Chinese investors and settled in the local currency, RMB.

B shares are open to individual or institutional foreign investors and settled in US dollars.

The Hang Seng China Enterprises Index is reviewed quarterly and is calculated
with free float adjustment; no constituents can have a weighting exceeding 10%.

Hang Seng China Enterprises Index is a stock market index of Red chips companies.

Red chips are mainland-controlled companies incorporated outside Mainland China and listed in Hong Kong. The H Shares are shares issued by companies incorporated in the Mainland of China and which listed on the SEHK.

The Hang Seng China-Affiliated Corporations Index reviewed quarterly
and is calculated with free float adjustment; no constituents can have a weighting exceeding 10%.

Debt securities listed on the SEHK are issued by HKSAR Government and The Hong Kong Mortgage Corporation Limited.