Free Sample Question

Corporate Governance

Corporate governance involves the relationships among a company’s management, its Board, its shareholders and stakeholders. Which ONE of the following is a suggested way for achieving the objectives of good corporate governance?

Having one person acting as both Chairman and CEO

Rotating directors so that no director serves for more than 3 years

Installing a strong regulatory structure operated by a strong independent regulator

Installing strong protective structures for majority shareholders

Liquid Capital

The Securities and Futures Commission’s Financial Resources Rules give the formula for calculating a corporation’s “liquid capital” as:

cash deposits + short term investments

cash deposits - short term liabilities

approved liquid assets – ranking liabilities

approved liquid assets + ranking liabilities

Options Trading

Trudy has traded a variety of stocks through her broker account over the past four years. She now informs her broker that she wishes to start trading options. Which ONE of the following is CORRECT?

All is fine as Trudy has displayed knowledge of trading

Under the Code of Conduct, Trudy must indemnify her broker for any option losses

Trudy’s broker must assess her knowledge of and suitability for options trading

Trudy must change her clearing arrangements

Exchange Participants

Which ONE of the following statements is CORRECT regarding the Stock Exchange of Hong Kong rules for exchange participants?

An exchange participant must be a shareholder of Hong Kong Exchanges and Clearing Limited (HKEx)

An exchange participant must be a corporate body

An exchange participant may have obtained its participantship through a transfer from another licensed corporation

An exchange participant must be licensed for Type 4 activity (Advising on Securities)

SMF

Under the Securities and Futures (Financial Resources) Rules, which of the following statements apply to securities margin financiers?The minimum liquid capital is HK$3 millionWhen calculating asset values, the value of stock held as collateral must be discounted to allow for price fluctuationsA concentrated risk adjustment on exposures to individual accounts or specific stock must be madeThere is a minimum paid-up capital requirement of HK$10 million

I and III only

II and IV only

I, III and IV only

I, II, III and IV

Options Exchange Participants

Which of the following statements are CORRECT?An options exchange broker participant may apply to the SEHK for permission to make a market in options contractsAn options market maker is entitled to make a market in futuresAn options market maker is obliged to offer two-way quotes for a minimum quantityA failure to respond to at least 50% of quote requests over two consecutive months may lead to the exchange revoking the market maker permit of a Regular Market Maker

III and IV only

I and II only

I and III only

II, III and IV only

Private Civil Actions

Parts XIII and XIV of the Securities and Futures Ordinance allow for private civil actions with respect to market misconduct. Which of the following statements CORRECTLY reflect the relevant provisions?An affected person has the right to sue for financial loss even if there are no Market Misconduct Tribunal hearings, criminal actions or convictions involving the target personAn affected person has the right to use Market Misconduct Tribunal evidence in bringing such an actionAn available remedy is an injunctionThe statutory right of action affects and limits the affected person’s common law rights

I and IV only

II and III only

I, II and III only

I, II, III and IV