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?

A
Having one person acting as both Chairman and CEO
B
Rotating directors so that no director serves for more than 3 years
C
Installing a strong regulatory structure operated by a strong independent regulator
D
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:

A
cash deposits + short term investments
B
cash deposits - short term liabilities
C
approved liquid assets – ranking liabilities
D
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?

A
All is fine as Trudy has displayed knowledge of trading
B
Under the Code of Conduct, Trudy must indemnify her broker for any option losses
C
Trudy’s broker must assess her knowledge of and suitability for options trading
D
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?

A
An exchange participant must be a shareholder of Hong Kong Exchanges and Clearing Limited (HKEx)
B
An exchange participant must be a corporate body
C
An exchange participant may have obtained its participantship through a transfer from another licensed corporation
D
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?

  1. The minimum liquid capital is HK$3 million
  2. When calculating asset values, the value of stock held as collateral must be discounted to allow for price fluctuations
  3. A concentrated risk adjustment on exposures to individual accounts or specific stock must be made
  4. There is a minimum paid-up capital requirement of HK$10 million
A
I and III only
B
II and IV only
C
I, III and IV only
D
I, II, III and IV
Options Exchange Participants

Which of the following statements are CORRECT?

  1. An options exchange broker participant may apply to the SEHK for permission to make a market in options contracts
  2. An options market maker is entitled to make a market in futures
  3. An options market maker is obliged to offer two-way quotes for a minimum quantity
  4. A 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
A
III and IV only
B
I and II only
C
I and III only
D
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?

  1. 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 person
  2. An affected person has the right to use Market Misconduct Tribunal evidence in bringing such an action
  3. An available remedy is an injunction
  4. The statutory right of action affects and limits the affected person’s common law rights
A
I and IV only
B
II and III only
C
I, II and III only
D
I, II, III and IV