HKSI Paper 8 (Securities) English Free Trial

Why do investors use indices?
I. Indices serves as a measure of the US stock market by tracking the performance of 30 “blue-chip” US-listed stocks from various industries.
II. Indices provides an indication of the relative value of individual companies.
III. Indices provides a benchmark for investors interested in “red chips”, which are mainland-controlled companies incorporated outside mainland
China and listed in Hong Kong.
IV. Indices serve as indicators of market trends, and can be used to assess market performance and to forecast future performance. They can also be
used to track the performance of managed funds.

Why do companies go public (listed)?
I. Listing provides stand-alone trading terminals for EPs both at the trading hall (first terminals) and at their offices (second terminals).
II. Listing provides the holder (the buyer) of the option the right, to buy or sell the underlying asset, at a future date (maturity) and at a predetermined price (strike price).
III. Listing provides a pseudo-hedge in uncertain or volatile times as most of the capital can be held in defensive investments (e.g. bank deposits) while still maintaining some exposure to the market.
IV. Listin allows it to raise additional capital for expansion. To the contrary, few private (unlisted) companies have access to capital beyond a certain level.
V. Listing a company spreads the risks across a number of owners, and raises the company’s profile.

Why is Hong Kong Interbank Offered Rate (HIBOR) such an important indicator in Hong Kong?
I. Hong Kong Interbank Offered Rate is an indicator of monetary conditions.
II. Hong Kong Interbank Offered Rate serves as indicators of market trends, and can be used to assess market performance and to forecast future performance
III. Hong Kong Interbank Offered Rate relies on historical or past price behaviour as an indicator of the future, and studies technical factors such as price movements, volume and trading activity as indicators of future trends.
IV. Hong Kong Interbank Offered Rate is an indicator of a company’s financial structure.

Under which circumstances Introductions may be appropriate?
I. Where the securities are already listed on another stock exchange
II. Where the securities of an issuer are distributed in specie by a listed issuer to the shareholders of that listed issuer or to the shareholders of another listed issuer
III. Where investors rely on the dealer or broker’s professional judgement to decide when and at what price to execute an order over a period of time.
IV. Where a holding company is formed and its securities are issued in exchange for those of one or more listed issuers
V. Where the subscription thereof may continue or further tranches thereof may be issued after listing has been granted.

Which are the services a share registrar provides for shareholders?
I. Distribution of dividends and bonus shares
II. Issuance of share certificates
III. Distribution of investor communications
IV. Safeguards the assets of an individual, a financial institution or corporation.

Which are the exchanges that were resulted due to the post-war growth in the Hong Kong economy?
I. Far East Exchange (established in 1969)
II. Kam Ngan Stock Exchange (established in 1971)
III. Shenzhen Stock Exchange
IV. Kowloon Stock Exchange (established in 1972).
V. Shanghai Stock Exchange

What were the major reforms recommended by the Davison report?
I. The fundamental revision of the SEHK and its management
II. An extension of the SEHK settlement period to seven days
III. Development of a central clearing system
IV. A review of Hong Kong futures exchange limited (“HKFE”)
V. Sustainable development in the local bond market

Which statements are correct in terms of Yield curves?
I. The yield curve is a curve plotting the yields of selected “benchmark” securities of the same type.
II. Yield curves is a tool that enables market participants to plot the performance of specific securities in different maturity ranges.
III. The yield curve is typically discussed within the context of a particular country or jurisdiction.
IV. The Yield curves on financial instruments is generally quoted in nominal terms.

Which are the Technical indicators?
I. The moving average (“MA”)
II. The relative strength indicator (“RSI”)
III. The moving average convergence-divergence indicator (“MACD”)
IV. The exponential moving average (“EMA”)

Which statements are correct technical analysis in regarding to charts and trend lines?
I. Line charts are diagrams of price movements that show the opening, highest, lowest and closing prices.
II. Bar charts plot closing prices for the chosen time period and draw a line to join the points.
III. Candlesticks show the highest, lowest, opening and closing prices for the chosen time period, plotted as vertical bars.
IV. Point and figure charts use a system of “O” and “X” to show downward and upward price movements.

Which statements are correct regarding to ordinary and preference shares?
I. Ordinary shares carry voting rights and dividends.
II. Preference shares do not carry voting rights.
III. Ordinary shares do not carry voting rights and dividends.
IV. Preference shares carry a fixed dividend rate; and rank ahead of ordinary shares in the liquidation of a company.

Which are the main objectives of Securities and Futures Commission in Hong Kong?
I. To maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry
II. To maintain Hong Kong’s status as an international financial centre, including the maintenance and development of Hong Kong’s financial infrastructure
III. To manage the Hong Kong government exchange fund (which holds, inter alia, the fiscal reserves)
IV. To promote understanding by the public of the operation and function of the securities and futures industry

A call option on the shares of XYZ Company has a strike price of $20. If the call option is priced at $6.5 per option, what is the time value of the option if the spot price of XYZ is $25/share?
I. $1.5
II. $5
III. $5.1
IV. $5.5

By which of the following the price of a warrant can be influenced?
I. The price of the underlying instrument
II. The exercise price
III. Time to expiry
IV. Conversion ratio
V. Volatility

What are the costs paid by a client when completing a transaction on the Hong Kong stock market?
I. Transaction costs payable to the SEHK, trading tariff of HKD0.40 on each trade (buy or sell)
II. Stamp duty payable to the government, 0.O5% on the value of a transaction
III. Transfer deed stamp duty of HKD5.00 per deed delivered for settlement (for seller)
IV. Transfer fee of HKD2.50 per new share certificate payable to share registrar.

What are the features of High frequency trading (“HFT”)?
I. They use sophisticated technological tools, both hardware and software.
II. They employ algorithmic and quantitative approaches.
III. They have access to a global marketplace
IV. They are usually proprietary trading firms

Which of the following oversees the clearing and settlement operations of all transactions on the SEHK?

Which of the following is the correct formula for compound interest?

What are the most common forms of warrants?
I. Mutual funds
II. Equity
III. Unit trusts
IV. Derivative warrants

Which of the following are the instruments whose values are derived from the values of their underlying assets, and provide investors with the opportunity of gaining exposure to an investment in the underlying asset without actually holding that asset?