FINANCE QUESTIONS.

QUESTION1: Which of the following are measures taken to promote the debt securities market of Hong Kong?

I) Introduction of regulated short selling in debt securities by the Hong Kong

Monetary Authority (HKMA).

II) Establishment of the market-making system by the Securities and Futures

Commission (SFC).

III) The formation of the Hong Kong Mortgage Corporation Limited (HKMC) in

1997.

IV) Tax exemptions on profits made from trading in certain debt securities.

A I and II only

B III and IV only

C II, III and IV only

D I, II, III, and IV

QUESTION2: What is the annual interest rate of a deposit if a total interest of $1,000 is earned from a deposit of $10,000 over a period of 5 years with no reinvestment on interest earned?

A 1.9% p.a.

B 2.0% p.a.

C 5.0% p.a.

D 10.0% p.a.

QUESTION 3: Which of the following products is NOT an example of a derivative?

A Mortgage backed securities.

B Warrants.

C Equity-linked notes.

D Structured notes.

QUESTION 4: The interest rate of a 1-year deposit in Australian Dollar (AUD) is 6.0% p.a. and the interest rate of a 1-year deposit in Euro (EUR) is 3.5%. If the 1-year forward rate between AUD and EUR is quoted at AUD1.6468 per EUR, what is the spot rate of AUD per EUR?

A 1.5701

B 1.5950

C 1.6080

D 1.6866

QUESTION 5: Country A allows its currency to be bought and sold freely in the foreign exchange market without any restrictions. However, when its currency fluctuates excessively, the central bank of Country A will step in to lower its volatility. Which of the following descriptions regarding Country As exchange rate regime is CORRECT?

A It is a fixed exchange rate regime.

B It is a dirty floating exchange rate regime.

C It is a linked exchange rate regime.

D It is an exchange rate regime adopted by the Hong Kong Monetary Authority

(HKMA).