HKSI Paper 11 (Corporate Finance) English Free Trial

Which of the following statement/s is/are correct?
I. A primary market is one where debentures or securities are first issued.
II. A primary market is one where securities are first issued.
III. A primary market is one where financial instruments or securities are first issued.
IV. A primary market is one where debentures and financial instruments are first issued.

Which of the following term/s is/are true?
I. Governments and companies can raise long-term funds from the capital market including the stock and bond markets.
II. Only companies can raise long-term funds from the capital market including the stock and bond markets.
III. Only Governments can raise long-term funds from the capital market including the stock and bond markets.
IV. Only financial institutions can raise long-term funds from the capital market including the stock and bond markets.

What is a ‘seasoned issue?’
I. Debentures shares
II. Preferential shares
III. Fixed bonds
IV. Additional shares

What is management buy-in (MBI)?
I. Theoretically Management buy-in is a third permutation.
II. It is a replacement for entering management team with new management.
III. It is part of an acquisition scheme, along with the company and the management with a renegotiated terms.
IV. It is a new management team buys into an existing enterprise.

For an investment bank, what is medium-term loan?
I. Loan having a maturity between 3 months to 4 months is the medium-term loan.
II. Loan having a maturity between 4 months to 6 months is the medium-term loan.
III. Loan having a maturity between 181 days to 12 months is the medium-term loan.
IV. Loan having a maturity between 12 months to 24 months is the medium-term loan.

What is the thumb rule for borrowing long term and short term loans?
I. Borrow long term for both short-term and long-term loans.
II. Borrow short term for both short-term and long-term loans.
III. Borrow short-term for a long-term loan and long-term for short-term loans.
IV. Borrow long-term for long-term loans and short-term for short-term loans.

Which of the following statement/s is/are correct?
I. Stronger and more creditworthy borrowers may bypass financial institutions to borrow directly from Fund Surplus Units (FSU) at a lower cost because they have the credit standing to approach the defined group of lenders directly.
II. Stronger and more creditworthy borrowers may use the service of intermediaries to borrow directly from Fund Surplus Units (FSU) at a lower cost because they have the credit standing to approach the defined group of lenders directly.
III. Stronger and more creditworthy borrowers may approach directly to Fund Surplus Units (FSU) because that is the banking financial practice.
IV. Any borrowers may bypass financial institutions to borrow directly from Fund Surplus Units (FSU) at a lower cost because they can approach any lenders directly.

Which of the following statement is true?
I. Surplus sector places funds with the intermediaries
II. Surplus sector places funds with the deficit sector
III. Surplus sector places funds with the borrow directly
IV. Surplus sector places funds with another surplus unit.

Which of the following statement is true?
I. A ‘security’ is a piece of paper, expressing the precise nature of pre-agreed terms of what is being traded. If shall carry the title to whatever is being traded, enabling its transfer between parties for consideration.
II. A ‘security’ is a piece of ‘security bond,’ outlining the nature of terms described to execute a deal.
III. A ‘security’ is a piece of ‘security bond,’ outlining the nature of terms described to execute a deal without mentioning any specific transaction.
IV. A ‘security’ is a piece of paper, outlining the nature of terms described to execute a deal. If shall carry the title to whatever is being traded, enabling its transfer between parties for consideration.

What will be the term of a company warrant?
I. It will have a term of 1-2 years
II. It will have a term of 2-6 years
III. It will have a term of 3-6 years
IV. It will have a term of 3-5 years

What will be the term of a derivative warrant?
I. It will have term value of 5 years
II. It will have term value less than 5 years
III. It will have a term value of 3-4 years
IV. It will have terms value less than one year

Which of the following statement is true?
I. Hong Kong’s derivative warrants market is one of the poorest in terms of turn over.
II. Hong Kong’s derivative warrants market is one of the moderate in terms of turnover.
III. Hong Kong’s derivative warrants market is one of the most active in terms of turnover.
IV. Hong Kong’s derivative warrants market is the second active in terms of turnover in comparison with New York derivative warrants.

How is interest rate risks mitigated in infrastructural finances?
I. By drafting fixed-rate contracts
II. By swaps
III. By options
IV. By leaving windows for further negotiations

What is red chip companies as per Hong Kong Stock Exchange terms?
I. Red Chip companies that are incorporated outside the People’s Republic of China and not listed on Hong Kong Stock Exchange
II. Red Chip companies that are incorporated outside the People’s Republic of China and listed in Hong Kong Stock Exchange and have significant
operations in the People’s Republic of China.
III. Red Chip companies that are incorporated in the People’s Republic of China and listed in Hong Kong Stock Exchange and have significant
operations in the People’s Republic of China.
IV. Red Chip companies that are incorporated in the People’s Republic of China and not listed on Hong Kong Stock Exchange and have significant
operations in the People’s Republic of China.

Which of the following statements are correct?
I. A type shares are not available for domestic investors.
II. A types shares are available for domestic investors or qualified foreign institutional investors and settled in Renminbi.
III. B type shares were initially available to domestic investors but now available for foreign investors.
IV. B type shares were initially available only to foreign investors but now available to domestic investors with a foreign exchange account and
transactions settled in US dollars in Shanghai and Hong Kong dollars in Shenzhen

Under the generation of investment proposal, from where senior managers are expected to generate recommendations?
I. Senior management generates proposals from the subordinate staffs.
II. Senior management generates proposals from the management teams.
III. Senior management generates proposal from the customers.
IV. Senior management generates proposal from professional consultants.

What are the time-related estimates required after assembling the proposal?
I. Initial and subsequent investment outlays.
II. Projected revenue from the project.
III. Anticipated impact on overall company revenues, expenses, balance sheet and corporate structures.
IV. Bank finance feasibility report.

What is the purpose of liquation of a company?
I. To stop further financial loss
II. To support the staff for getting their dues
III. To find means to pay out the debts
IV. To achieve a full or partial return of the financial institution’s funds.

For what purpose discount is predominantly using in the money market?
I. It is using as a commercial paper
II. It is using to settle the accounts
III. It is using to pay out outstanding
IV. It is using zero-coupon bonds in the financial market.

What is settlement risk as per financial terms?
I. If a counterparty fails to fulfill its obligation in a transaction at settlement is known as settlement risk.
II. Any impending failure at settlement is known as settlement risk.
III. Any unforeseen settlement disputes are known as settlement risk.
IV. Any inadvertent settlement issues are known as settlement risk.