Before diving into the questions, a quick note on how HKSI exams tend to frame topics: you need to map each scenario to the core functions of the SFC, core risk concepts, and corporate governance structures in Hong Kong. In this post, we walk through five representative questions and highlight the practical takeaways you can apply in both the exam and real-world practice.
Q1. Regulation enforcement department tasks
Question: Which of the following tasks is NOT performed by the SFC's Regulation Enforcement Department? Options: A, B, C, D. Answer: D
Key points:
- The Regulation Enforcement Department enforces under the Securities and Futures Ordinance (SFO).
- It monitors trading activity in Hong Kong's securities and derivatives markets and investigates misconduct.
- It may discipline regulated entities that are dishonest or fail to comply.
- It reports market misconduct to the Financial Secretary.
- It reviews the books and records of listed companies related to misconduct.
- It cooperates with local and overseas regulators.
- It does not enforce under the Banking Ordinance.
Takeaway: Know the statutory backbone (SFO) and the limits of the SFC's mandate.
Q2. What affects loan interest rates?
Question: Which factors are likely to influence interest rates? I. Economic environment; II. Borrower's creditworthiness; III. Lender's creditworthiness; IV. Political factors. Answer: A (I and II)
Notes:
- Interest rates generally reflect macroeconomic conditions and the credit risk of borrowers.
- Lender-specific policy and funding costs matter, but among the options, the primary drivers are the economic environment and borrower creditworthiness.
- Political factors can have indirect effects but are not a direct primary driver in standard lending pricing.
Takeaway: Focus on macro conditions and borrower risk when assessing rate expectations.
Q3. Which item is unlikely to be an institutional investor?
Question: Which item is least likely to be an institutional investor? A California Teachers’ Pension; B foreign insurer; C investment bank subsidiary; D a local legal entity trading securities futures for speculation. Answer: D
Notes:
- Institutional investors are large, professional entities that invest capital on behalf of others, such as banks, insurers, fund managers, and other financial institutions.
- A, B, C fit the category; D is a speculative local entity and not typically classified as an institutional investor.
Takeaway: Remember the typical institutions that dominate large-scale asset management.
Q4. Value-at-Risk (VaR) purpose
Question: The VaR method is generally used for which purpose? Options: A Arbitrage; B Risk management; C Trend analysis; D Pricing options Answer: B
Notes:
- VaR is a risk measurement tool used to quantify potential losses over a horizon at a given confidence level.
- It’s a core part of risk management and capital adequacy processes.
Takeaway: When you see VaR in a question, think risk measurement and management.
Q5. Contents of a Hong Kong public company's Articles of Association
Question: A listed company’s Articles may include which of the following? (1) Directors' powers and qualifications (2) Shareholders’ meeting and voting procedures (3) Rights of shareholders (4) Administrative arrangements Options: A (1)(2)(3), B (2)(3)(4), C (1)(2)(4), D All of the above Answer: C
Notes:
- The provided key indicates that (1) and (2) and (4) are the elements typically covered, while (3) "Rights of shareholders" is considered non-applicable in this framing; thus the combination (1)(2)(4) is identified as the correct choice.
- In practice, corporate documents address governance provisions and procedures; framing in exam questions may emphasize specific items.
Takeaway: Know what the Articles of Association typically cover: directors’ powers/qualifications, meeting/voting procedures, and administrative arrangements.
Final takeaways
- Map each question to core HK regulatory functions, risk concepts, and governance structures.
- For regulation questions, distinguish between the Securities and Futures Ordinance (SFO) and other statutes (e.g., Banking Ordinance).
- For risk-related questions, focus on macro conditions and credit risk as primary drivers.
- For corporate governance items, understand what the Articles commonly include and be aware of nuanced exam wording.
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