Which are the responsibilities of SFC?
I. To regulate Hong Kong’s securities, futures and related financial markets to protect investors
II. To uphold the integrity of the Hong Kong markets
III.To ensure that the issuer satisfies the listing requirements
IV. To organize the issue of the securities
V. To raise the standards of the market through effective surveillance and timely investigation of misconduct and crime in the securities market15

Which the following statements regarding the right issue are correct?
I. A rights issue is issued at a certain price
II. It is a means of raising new capital for a company from existing shareholders
III.Rights issues have no  dilution effect on the share price
IV. Rights issues may be renounceable or non-renounceable
V. A right issue doesn’t raise new capital for a company

What are the advantages of investing in Exchange Fund Bills?
I. A low risk investment
II. Leverage or gearing effect
III.Highly liquid and tradable assets
IV. A stable and predictable source of income
V. Have higher returns than equity

What are the major features of the Hong Kong stock market?
I. Market covers all major sectors
II. 3rd largest by capital raised from initial public offerings (“IPO”) in 2010
III. Highly liquid market
IV. 7th largest market in the world by market capitalization in June 2011
V.  2nd largest market in Asia in June 2011 by market capitalization

What were the consequences of the Davison Report released in May 1988 regarding the regulation of the securities and futures industry?
I. The Davison Report led to the establishment of the SFC.
II. The Davison Report has reflected the overall movement in share prices.
III.The Davison Report has tracked the share price movement of constituent companies listed on HKEx.
IV. The Davison Report had significant influence on the Hong Kong market.
V. The Davison Report has provided an important indication of market performance around the world.

Which of the following statements regarding primary market are true?
I. The primary market relies on a liquid secondary market.
II. The primary market is where securities are issued as consideration in a transaction or in connection with a takeover or merger or the division of an issuer.
III.The primary market is an intermediary between the issuer of a security and the investing public.
IV. Listed securities are traded on the primary market, which operates between one investor and another.
V. The primary market is where new capital is raised and securities are issued for the first time.

Which the following statements regarding the secondary market are true?
I. Listed securities are traded on the secondary market, which operates between one investor and another.
II. Liquidity is an important aspect of the secondary market, as it is essential that there are sufficient buyers and sellers to facilitate trading in a stock.
III.The secondary market is an important part of the financial system.
IV. The Secondary market is where a company raises new capital and securities are issued for the first time.
V. The Secondary market offers new or small companies with growth aspirations a means of raising capital.

Which are the main objectives of Securities and Futures Commission(SFC)?
I. To maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry
II. To assist the financial secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the securities and futures industry
III.To promote the stability and integrity of the financial system, including the banking system, via the supervision of licensed banks and deposit-taking companies
IV. To help to maintain Hong Kong’s status as an international financial centre, including the maintenance and development of Hong Kong’s financial infrastructure
V. To promote understanding by the public of the operation and function of the securities and futures industry

Which the following statements are correct in regarding to Growth Enterprise Market?
I. Growth Enterprise Market offers new or small companies with growth aspirations a means of raising capital.
II. Growth Enterprise Market does not require companies to have achieved a record of profitability as a condition of listing.
III.Investment on GEM carries a lower risk than on the Main Board and the market caters primarily for professional and sophisticated investors.
IV. Growth Enterprise Market does require the new applicant to have at least a positive cashflow of HKD20 million in aggregate generated from its ordinary operating activities for the two financial years immediately preceding the issue of the listing document.
V. The scope of listing requirements for GEM is largely in line with that of the Main Board but highly stringent.

Why would a company list on Growth Enterprise Market (GEM)?
I. Growth and emerging enterprises list on GEM to gain access to capital markets.
II. GEM generally does not interfere in the internal management of the company’s operations and may suspend a company only if it deems the company’s assets insufficient.
III.In order to maintain the confidence of investors GEM suspend trading in the shares of any company once it reports a net loss.
IV. GEM can limit a company’s debt–to-equity ratio to 20%, or restrict the proportion of foreign nationals on the board of a listed company.
V. As a record of profitability is not required for listing on GEM, such companies can gain access to capital earlier than through the Main Board.

Which are the principal roles or functions of a stock exchange?
I. To clarify the individual functions they perform and how they contribute to the markets
II. To maintain currency stability
III.To provide a fair, orderly and efficient market for the trading of securities
IV. To promote the stability and integrity of the financial system, including the banking system, via the supervision of licensed banks and deposit-taking companies
V. To minimize crime and misconduct in the securities and futures industry

Which are the main functions of Hong Kong Monetary Authority (HKMA)?
I. Maintaining currency stability (currently through the linked exchange rate system)
II. Managing the Hong Kong government exchange fund (which holds, inter alia, the fiscal reserves)
III.Reducing systemic risks in the securities and futures industry
IV. Helping to maintain Hong Kong’s status as an international financial centre, including the maintenance and development of hong kong’s financial infrastructure
V. Promoting understanding by the public of the operation and function of the securities and futures industry

Which are the Functional units of the Hong Kong Monetary Authority (HKMA)?
I. Banking Conduct
II. Internal
III.Financial Infrastructure
IV. Fund management
V. Research and Corporate Services

Warrant issuers are required to appoint an LP for each of their listed warrants. For each warrant issue, there can only be one LP. What are the obligations of LP?
I. Insuring that the client understands the contents of the agreement before signing it.
II. Providing liquidity for warrants by means of continuous quotes or quote requests from five minutes after the market has opened until the market closes;
III.Ensuring that client securities are adequately safeguarded by either depositing them in trust accounts or registering them in the name of the client or the associated entity of the broker.
IV.Specifying in the listing document the maximum spread between the bid and offer prices for each warrant;
V. Ensuring adequate recording of audit results and findings, and that problems or risks are highlighted and resolved.

Under which circumstances there is no need for the LP to provide liquidity?
I. During the Pre-market opening session and the first five minutes after the market has opened.
II. The LP will provide bid prices only if the issuer has a lot of warrants available for sale.
III.The LP will not provide bid prices if the theoretical value of a warrant is less than HK$ 0.10.
IV. When the issuer or LP has technical difficulties in its normal operations.
V. When trading in the underlying asset of a warrant is suspended.

Which of the following statements are correct?
I. Debt ratio = total assets/ total debt.100%
II. Debt-to-equity ratio = total debt/ total equity.100%
III.Return on equity= profit after tax /average equity .100%
IV. Net profit margin= sales/ profit after tax . 100%
V. Return on assets=profit after tax/ total sales

What are the stages of the industry growth cycle?
I. Initial development
II. Price movements
III.Resistance
IV. Rapid expansion
V. Mature growth

Which aren’t the stages of a business?
I. Peak to contraction
II. Contraction to trough
III.Peak to expansion
IV. Trough to expansion
V. Expansion to peak

Which are not correct in regarding to top-down types of analysis?
I. Top-down analysis starts with a micro view of the company to establish an intrinsic value.
II. Top-down analysis focuses on the company and its financial performance, second considers the industry sector and finally the economy as a whole.
III. Top-down analysis starts with a macro view and looks at the economic environment both globally and domestically, and then moves down to a micro view of the
company.
IV. The top- down analysis takes the opposite approach and begins with the micro view of the company to establish an intrinsic value
V. Top-down analysis looks first at the economic environment from both global and domestic perspectives

Which are the common features of High frequency trading (“HFT”) that can be identified in its practitioners?
I. They use sophisticated technological tools, both hardware and software.
II. They employ only quantitative approaches.
III. They are usually proprietary trading firms.
IV. They have a low daily turnover, in terms of both orders and transactions.
V. They usually hold very high positions overnight.

Which are the rapid changes that technology has brought to the financial markets?
I. The availability of vast amounts of up-to-date information for both investment professionals and investors;
II. A limited choice of products for investors
III. Access to on-line trading of securities;
IV. Improved speed and efficiency of execution and settlement;
V. Prompt paper-based trading

The SFC suggests that the risk management policies and procedures of securities firms cover four main risk areas. What are these areas?
I. Credit, market, liquidity and operational risks
II. Credit, interest rates, liquidity and operational risks
III. Market, liquidity, inflation and operational risks.
IV. Credit, market, liquidity and economic risks
V. Credit, interest rates, liquidity and funding risks

What are the advantages of investing in Exchange Fund Bills?
I. Access to experienced professional management
II. Interest rate usually exceeding bank deposit rates
III. A stable and predictable source of income
IV. Access to a wider range of investment opportunities and access to those which require specialist knowledge
V. Highly liquid and tradable assets

What are the benefits to investors of managed investments?
I. A low risk investment
II. The ability to diversify even a small portfolio and so spread the risk
III.Relief from many of the administrative chores associated with direct investment
IV. Taxation advantages – in some instances, dependent on the type of fund and the particular circumstances of the individual investor
V. Highly liquid and tradable assets

Which statements are true in regarding to Pilot Programme Securities?
I. A pilot programme for trading US securities was introduced to the Hong Kong stock market in May 2000.
II. Pilot programme securities have public offering in Hong Kong.
III. Under Pilot programme securities a number of global securities listed on the National Association of Securities Dealers Automatic Quotations and the NYSE Amex
Equities) were admitted to trade on the SEHK.
IV. Pilot programme securities are regulated as listings on the SEHK’s Main Board or Growth Enterprise Market.
V. Pilot programme securities programme allows for cross-border settlement, and NASDAQ or NYSE Amex securities purchased in the USA can be traded in Hong Kong through
the pilot programme and vice versa.

What are the disadvantages of investing in a unit trust or mutual fund?
I. The company is subjected to greater scrutiny of its dealings and performance by regulatory authorities, shareholders, analysts, the media, etc.
II. It is usually a long-term investment vehicles.
III. It is lack of investor’s control over the investment.
IV. There may be a possible loss of control by the original owners or entrepreneurs, and the company is subjected to public scrutiny.
V. External factors and market forces influence the value of the company more directly than in the case of private companies.

What are the benefits of investing in a unit trust or mutual fund?
I. Leverage or gearing effect
II. Speculation with smaller outlay and market exposure
III. Professional management
IV. Lower custody costs
V. Access to global investment opportunities

What should a firm undertake to have a clear internal audit?
I. A firm should ensure adequate recording of audit results and findings, and that problems or risks are highlighted and resolved.
II. A firm should ensure the integrity of the market and the protection of investors.
III. A firm should ensure that client securities are adequately safeguarded by either depositing them in trust accounts or registering them in the name of the client or
the associated entity of the broker.
IV. A firm should ensure that the client understands any potential risks and the broker should avoid or disclose any conflict of interests
V. A firm should ensure that the persons performing the audit are adequately trained and have sufficient technical knowledge to undertake the task;

What are the risks of margin financing?
I. Leverage effect
II. Corporate decisions
III. Pooling risk
IV. Systematic risk
V. Liquidity risk

For what reasons SEHK can suspend or delist a company?
I. The issuer fails, in a manner considered material, to comply with the Listing Rules or its Listing Agreement
II. There are insufficient securities in the hands of the public
III. The company isn’t licensed by the SFC.
IV. The issuer does not have a sufficient level of operations or assets to warrant the continued listing of its securities
V. The issuer is unable to hedge its exposure

Which statements are correct in regarding to Sponsor?
I. The sponsor plays an important role in the listing of a company on the SEHK.
II. A sponsor must enter into a written agreement (in Chinese or English) with the client before rendering any services
III.Sponsors must ensure that they have adequate internal control procedures (e.g. for order recording and other record maintenance) to ensure the
integrity, efficiency and security of their operations.
IV. The sponsor is responsible for preparing the new applicant for listing, lodging the formal application and preparing all supporting documentation to the SEHK.

Which statements are wrong in regarding to Traders?
I. A trader is an individual or organization (e.g. an investment bank) that acts as a principal rather than an agent in securities transactions.
II. A trader acts on his own account or on behalf of his organization in buying and selling securities.
III.A trader may hold an inventory of securities, which can be sold to clients by brokers or bought and sold on the market for the purposes of making a profit.
IV. A trader buys and sells securities on behalf of clients only.