You are on page 1of 10

2CEXAM Mock Question

Licensing Examination Paper 12

16-Sep-19
19:49:42
1 Effectively investors of managed funds delegate the investment management of their money to Topic 1
professionals, who exercise their own discretion as to how it should be invested. So managed funds are:
A trust investment. Chapter 1

B non-trust investment. Section

C discretionary investment. QID 813

D half-discretionary investment. Ans C Hot

Exp Effectively, individuals delegate the investment management of their money to professionals, who
exercise their own discretion as to how it should be invested.
2 The plan which allows local institutional investors in Mainland China to invest in overseas financial Topic 1
markets is
A RQFII Chapter 1

B QDII Section

C QFII QID 2011

D CEPA Ans B Hot

Exp QDIIs are local institutional investors (such as fund houses, banks, insurance companies and securities
brokerages) in Mainland China who have been granted permission to invest in overseas financial markets.
3 In the future, the advantage of the market for funds in Hong Kong doesn't include: Topic 1

A Geographically close to the mainland China Chapter 1

B Strong and robust financial infrastructure Section

C Accurate and effective financial regulation, rules and financial professionals QID 822

D Lower tax rate than the average globe but higher than China Ans D Hot

Exp Local tax rate is not the main concern because fund is tended to invest in many other countries.
4 There is a huge increase in the market for managed fund in Hong Kong. Which of the following is not the Topic 1
main reason?
A Hong Kong continues to attract professionals in financial asset management. Chapter 1

B The introduction of QDII, CEPA, and RQFII Section

C Hong Kong is widely acknowledged as an international asset management centre in Asia. QID 821

D Hong Kong's advantage of innovation in bond market Ans D Hot

Exp Hong Kong attracts fund managers for several reasons, including: its central location in Asia; clear
regulations on how to establish and become authorized in the local market, a just and equitable legal
system, the English language (mandatory for conducting international business) and administration skills
(needed to develop and maintain a viable operation); a simple and low-tax regime; a window to mainland
China (and its mass market); a world class and technologically advanced communications system and
telecommunication network; high liquidity in the local stock market; a plentiful supply of professionals,
such as accountants, lawyers and stockbrokers, to support the fund management industry.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.1


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
5 Which of the following is not the reason why offshore fund is popular? Topic 1

A Tax haven Chapter 1

B Lower regulation Section

C Close to large market QID 820

D Higher regulation Ans D Hot

Exp There are three reasons for their success: low taxes, less burdensome regulation and supervision, and (in
most cases) strict secrecy laws protecting bank clients.
6 Which of the following is the major classification of managed fund? Topic 1

A Private fund Chapter 1

B Hedge fund Section

C Private trust QID 819

D Unit fund Ans B Hot

Exp Hedge fund is the major classification of managed fund.


7 Which of the following is not the major classification of managed fund? Topic 1

A Mutual trusted fund Chapter 1

B Mutual fund Section

C Umbrella funds QID 818

D Mandatory Provident Fund Ans A Hot

Exp In a competitive global market, many types of managed funds are offered, including unit trusts, mutual
funds, retirement or corporate funds and private equity funds. The management of all such funds is called
asset management.
8 "They are natural person who has an investment amount lower than institutional investor but higher than Topic 1
retail investor" Which kind of investor/customer is it more likely to be?
A Start-up investors Chapter 1

B Wealthy investor Section

C Private customer QID 817

D Corporate customer Ans C Hot

Exp Private customer has an investment amount lower than institutional investor but higher than retail
investor.
9 "Investment requirement is usually simpler than institutional investors, complexity of investment goal is Topic 1
lower, and there is no need of documentation of investment entrusted" Which kind of investor/customer is
it more likely to be?
A Institutional investor Chapter 1

B Retail investor Section

C Private customer QID 816

D Corporate customer Ans B Hot

Exp Retail/private investors: these are individuals invest on their own behalf. Their complexity of investment
goal is lower, and there is no need of documentation of investment entrusted since they trade for
themselves.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.2


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
10 In the classification of managed fund market, large institutional investors like insurance companies and Topic 1
pension fund are classified:
A as retail market. Chapter 1

B as institutional customer market(wholesale market). Section

C between retail market and institutional customer market. QID 815

D as a kind of private customer investor. Ans B Hot

Exp In Hong Kong, the main institutional investors include banks, insurance companies, fund managers and
other financial institutions.
11 __ is also called wholesale investor who has a larger investment amount and more complex investment Topic 1
goals.
A Institutional investor Chapter 1

B Retail investor Section

C Private customer QID 814

D Corporate customer Ans A Hot

Exp Institutional investors: in Hong Kong, the main such investors include banks, insurance companies, fund
managers and other financial institutions. They are called wholesale investor who has a larger investment
amount and more complex investment goals.
12 The plan which allows foreign institutional investors to invest in China securities by RMB is Topic 1

A RQFII Chapter 1

B QDII Section

C QFII QID 1987

D CEPA Ans A Hot

Exp RQFII is a policy initiative of mainland China, which allows qualified RQFII holders to channel renminbi
funds raised in Hong Kong to invest in the Mainland securities markets.
13 The plan which allows foreign institutional investors to invest in China securities is Topic 1

A RQFII Chapter 1

B QDII Section

C QFII QID 1988

D CEPA Ans C Hot

Exp QFIIs are foreign institutional investors who are allowed to invest in China A shares.
14 MPF schemes belong to which pillars ? Topic 1

A a privately managed, tax-financed social safety net for the old; Chapter 1

B a mandatory, privately managed, fully funded contribution scheme Section

C voluntary personal savings and insurance QID 1985

D a publicly managed, tax-financed social safety net for the old Ans B Hot

Exp MPFA requires all employees aged between 18 and 65, including the self-employed, to participate in
registered MPF schemes (except those remaining in the original ORSO schemes). These schemes rely on
the fund management industry for investment products, which are simply a collection of investment
schemes or managed funds.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.3


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
15 The plan which allows local institutional investors in Mainland China to invest in overseas financial Topic 1
markets is
A RQFII Chapter 1

B QDII Section

C QFII QID 1989

D CEPA Ans B Hot

Exp QDIIs are local institutional investors (such as fund houses, banks, insurance companies and securities
brokerages) in Mainland China who have been granted permission to invest in overseas financial markets.
16 Which factor most likely determines the supply of goods and services? Topic 1

A Price of goods and services Chapter 1

B Production cost Section 1

C Distribution cost QID 9

D Supply and price of substitutes Ans A Hot

Exp The objective of the producer is to make a profit from the item. Hence, the most important factor, from the
producer’s perspective, is the price that can be obtained from selling the item.
17 Generally demand curve is: Topic 1

A upward-sloping. Chapter 1

B downward-sloping. Section 1

C flat. QID 8

D wavy. Ans B Hot

Exp Generally, the higher the price for the item, the lower the quantity demanded for it will be, and vice versa.
Quantity demanded is therefore inversely related to price. Thus, demand curve is generally shown as
negatively sloped curve.
18 Investors can be classified into which 2 of the following types? Topic 1
I. Individuals
II. Corporate
III. Institutions
IV. Private Clients
A I, III Chapter 1

B II, III Section 1

C II, IV QID 1982

D III, IV Ans A Hot

Exp Today, the asset management market in Hong Kong is mainly divided into three categories: institutional,
retail and private client markets.
19 Managed funds are: Topic 1

A indirect investments. Chapter 1

B semi-direct investment. Section 2

C direct investments. QID 810

D semi-indirect investments. Ans A Hot

Exp Managed funds are indirect investments known as collective, pooled or investment funds.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.4


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
20 What are managed funds also known as? Topic 1
I. Collective Investments
II. Pooled Investments
III. Investment Funds
IV. Funds
A I, III Chapter 1

B II, IV Section 2

C II, III, IV QID 1983

D I, II, III, IV Ans D Hot

Exp There are five types of managed funds: unit trusts, mutual funds, umbrella trusts, MPF funds and hedge
funds.
21 Kaohsiung company starts a collective investment scheme called "Garbage Dealing Fund" which is Topic 1
managed by a fund manager called Mr. Ye and mainly invests in foreign stocks. Many retail investors buy
"Garbage Dealing Fund" through banks. What kind of product is the "Garbage Dealing Fund"?
A Sovereign fund Chapter 1

B Unit trust. Section 3

C Depository receipts QID 1165

D Fixed income securities Ans B Hot

Exp A unit trust refers to a collective investment scheme pooling money from individual investors, with a large
portfolio of securities managed according to pre-set investment objectives by professional fund managers.

22 The main difference between mutual fund and unit investment trust is Topic 1

A The level of fees Chapter 1

B Legal structure Section 3.2

C No differences QID 1799

D Investment restrictions Ans B Hot

Exp Mutual funds are similar to investment trusts from an investment perspective, and the difference lies only
in their legal structure. A unit trust is established in the form of a trust, while a mutual fund is established
in the form of a company.
23 What is the feature of offshore financial center: Topic 1
I. Low tax rate
II. Less regulation
III. Highly confidential
IV. Sound law system
A I, II, III Chapter 1

B I, III, IV Section 4

C II, III, IV QID 2196

D I, II, III, IV Ans A Hot

Exp There are three reasons for the success of offshore financial center: low taxes, less burdensome
regulation and supervision, and (in most cases) strict secrecy laws protecting bank clients.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.5


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
24 The mechanism for QFIIs allows foreign institutional investors to invest Topic 1

A A shares Chapter 1

B B shares Section 5.2

C H shares QID 2199

D Specific shares Ans A Hot

Exp QFIIs are foreign institutional investors who are allowed to invest in China A shares.
25 The mechanism for QDIIs allows Topic 1

A Investors in Mainland China to invest in overseas financial markets. Chapter 1

B Foreign investors to invest in China financial markets. Section 5.2

C Hong Kong investors to invest in China securities . QID 2197

D Investors in Mainland China to invest in Hong Kong financial markets. Ans A Hot

Exp QDIIs are local institutional investors (such as fund houses, banks, insurance companies and securities
brokerages) in Mainland China who have been granted permission to invest in overseas financial markets.
26 QFIIs are foreign institutional investors who are allowed to invest Topic 1

A A shares Chapter 1

B B shares Section 5.2

C H shares QID 1956

D Specific shares Ans A Hot

Exp Qualified Domestic Institutional Investors (“QDIIs”) and Qualified Foreign Institutional Investors (“QFIIs”)
are introduced in China in 2002. QDIIs are local institutional investors (such as fund houses, banks,
insurance companies and securities brokerages) in Mainland China who have been granted permission to
invest in overseas financial markets, while QFIIs are foreign institutional investors who are allowed to
invest in China A shares. These have an impact on the flow of funds in the market. Investment by QFIIs,
for instance, has a positive impact
on the flow of funds into the country.
27 The mechanism for QFIIs allows Topic 1

A Investors in Mainland China to invest in overseas financial markets. Chapter 1

B Foreign investors to invest in China financial markets. Section 5.2

C Hong Kong investors to invest in China securities . QID 2198

D Investors in Mainland China to invest in Hong Kong financial markets. Ans B Hot

Exp QFIIs are foreign institutional investors who are allowed to invest in China A shares.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.6


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
28 Which of the following factor is not the reason why there is sharp increase in services of financial advisor? Topic 1

A Aging population Chapter 1

B Large increase in saving Section 5.3

C Markets for finance and investments become more mature day by day. QID 698

D Global plunge in interest rate Ans D Hot

Exp In many countries, the aging of the post-World War II baby-boomers has driven the growth of the financial
advisory industry. This aging has been brought about by increased longevity in the majority of developed
world populations. This large segment of the population is more highly educated and wealthier than
preceding generations. The high average savings of such people represent a larger percentage of the
population than earlier or subsequent generations, and their accumulated savings have stimulated
demand for financial advisory services. The profession has gained importance in recent years as the
financial and investment markets have become increasingly sophisticated.
29 Why are the needs of individual financial advisors getting bigger and bigger? Topic 1
I. Aging population in developed countries
II. Higher level of saving
III. The increased mobility of the labour force
IV. As the financial markets of investments becomes mature.
A I, II, III, IV Chapter 1

B I, II, IV Section 5.3

C I, III, IV QID 696

D II, III, IV Ans A Hot

Exp In many countries, the aging of the post-World War II baby-boomers has driven the growth of the financial
advisory industry. This aging has been brought about by increased longevity in the majority of developed
world populations. This large segment of the population is more highly educated and wealthier than
preceding generations. The high average savings of such people represent a larger percentage of the
population than earlier or subsequent generations, and their accumulated savings have stimulated
demand for financial advisory services.
30 Why is Hong Kong a popular place for fund management? Topic 1
I. Low tax rate
II. Have many professionals to back up
III. Transparent and sound rules
IV. It is the only place where investors in mainland China can invest overseas.
A I, II, III Chapter 1

B I, II, IV Section 5.3

C I, III, IV QID 679

D II, III, IV Ans A Hot

Exp With the globalization of investment activity, many independent fund managers have come to Hong Kong.
Hong Kong attracts fund managers for several reasons, including: (1) its central location in Asia; (2) clear
regulations on how to establish and become authorized in the local market, a just and equitable legal
system, the English language (mandatory for conducting international business) and administration skills
(needed to develop and maintain a viable operation);
(3) a simple and low-tax regime; (4) a window to mainland China (and its mass market); (5) a world class
and technologically advanced communications system and telecommunication network; (6) high liquidity
in the local stock market; (7) a plentiful supply of professionals, such as accountants, lawyers and
stockbrokers, to support the fund management industry.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.7


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
31 Which of the following statement correctly describes the activities of asset management? Topic 1
I. A fund cannot hold securities issued by a single issuer with value more than 10% of its total net assets
value.
II. A fund cannot hold more than 10% of the ordinary shares issued by a single issuer.
III. A fund should manage its assets according to its target and strategy.
IV. A fund can be sold publicly in Hong Kong only if it is registered in Hong Kong.
A I, II, III Chapter 1

B I, II, IV Section 7.1

C I, III, IV QID 682

D II, III, IV Ans A Hot

Exp - A fund cannot hold securities issued by a single issuer with value more than 10% of its total net assets
value.
- A fund cannot hold more than 10% of the ordinary shares issued by a single issuer.
Investments in a particular fund will be made in line with the fund’s investment objective and strategy.
32 Which of the following fund does not violate the diversification rule in《Code on Unit Trusts and Mutual Topic 1
Funds》?
A Spring fund - invests in 15% of shares issued by company A equivalent to 50% of the fund's net assets Chapter 1
value
B Summer fund - invests in 15% of shares issued by company A equivalent to 5% of the fund's net assets Section 7.1
value
C Autumn fund - invests in 2% of shares issued by company A equivalent to 50% of the fund's net assets QID 825
value
D Winter fund - invests in 10% of shares issued by company A equivalent to 5% of the fund's net assets Ans D Hot
value
Exp The Securities and Futures Commission has set standards on diversification in Hong Kong. These
requirements are stated in the Code on Unit Trusts and Mutual Funds, and include: (1) A fund cannot hold
securities issued by a single issuer with value more than 10% of its total net assets value. (2) A fund
cannot hold more than 10% of the ordinary shares issued by a single issuer.
33 Investing in managed fund has which of the following advantages? Topic 1
I. Have more investment opportunities than direct investment
II. Have professional services of investment management
III. Cost advantages with lower commission
IV. Focused investment to increase return
A I, II Chapter 1

B I, II, IV Section 7.1

C I, II, III QID 826

D II, IV Ans C Hot

Exp The key benefits of managed funds are (i) access to professional investment management services; and
(ii) diversification. Diversification is the ability to spread your assets across different asset classes,
sectors, countries or issuers of securities. A diversified portfolio aims to minimize risk by offsetting
losses from some securities with gains in others.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.8


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
34 Why is investing in fund better than investing in stocks? Topic 1
I. Easy to diversify
II. Can invest in different markets
III. Cost reduction
IV. More easy to control investment directly
A I, II, III Chapter 1

B I, II, IV Section 7.1

C I, III, IV QID 703

D II, III, IV Ans A Hot

Exp The key benefits of managed funds are access to professional investment management services; and
diversification. Fund managers can also invest in a broader range of securities, and usually faster and
more cheaply, than individuals. Through managed funds, the investment range is broadened to include
overseas investments. In Hong Kong, this is particularly relevant as the majority of authorized managed
funds are based elsewhere, enabling the investor to choose the fund manager with the best skill set and
local knowledge in the market in which he wants to invest.
35 The advantages of investing in unit trusts or mutual funds include: Topic 1
I. Professional management
II. Various and diversified investment channels
III. Simple procedure
IV. Tax incentives
A I, II, III Chapter 1

B I, III, IV Section 7.1

C II, III, IV QID 1168

D I, II, III, IV Ans D Hot

Exp Individual investors benefit from professional management, diversification, a broader range of
opportunities, cost benefits, and convenience through managed funds.
36 The advantages of investing in unit trusts or mutual funds doesn't include: Topic 1

A Professional management Chapter 1

B Low custodian fees Section 7.1

C Various and diversified investment channels QID 1166

D Long investment periods Ans D Hot

Exp Having long investment periods is the disadvantage of investing in unit trusts or mutual funds. It is
because it is more risky.
37 Investing in managed fund doesn't have which of the following advantages? Topic 1

A Higher return Chapter 1

B Technology Section 7.1

C Liquidity QID 827

D Convenience Ans A Hot

Exp Individuals, employers, institutions and companies are generally attracted to managed funds because
their money is handled by professionals who have the expertise to produce a higher return for a given risk
level than they would achieve themselves.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.9


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
38 A fund cannot hold more than how many percent of the ordinary shares issued by a single issuer. Topic 1

A 5% Chapter 1

B 10% Section 7.1

C 15% QID 685

D 20% Ans B Hot

Exp A fund cannot hold more than 10% of the ordinary shares issued by a single issuer.
39 A fund cannot hold securities issued by a single issuer with value more than how many percent of its total Topic 1
net assets value?
A 5% Chapter 1

B 10% Section 7.1

C 20% QID 684

D 25% Ans B Hot

Exp A fund cannot hold securities issued by a single issuer with value more than 10% of its total net assets
value.
40 Mr. Gao is an elderly retiree who knows little about investments. What is the more likely reason for Mr. Gao Topic 1
to invest in fund?
I. Increase investment opportunity
II. Diversification
III. Increase the control for investment
IV. Reduce the cost of investment
A I, III, IV Chapter 1

B I, II, III Section 7.1

C I, II, IV QID 683

D II, III, IV Ans C Hot

Exp The key benefits of managed funds are access to professional investment management services; and
diversification. Fund managers can also invest in a broader range of securities, and usually faster and
more cheaply, than individuals. Certain investment opportunities may only be available to large investors,
such as bonds and direct property. Through managed funds, small retail investors can gain exposure to
such assets.
41 What is the advantage of investing in managed funds? Topic 1
I. Professional management
II. Risk diversification
III. Exempt from capital appreciation tax
IV. Higher returns than other investors for certain
A I, II Chapter 1

B I, III Section 7.1

C I, IV QID 492

D II, III Ans A Hot

Exp The key benefits of managed funds are (i) access to professional investment management services; and
(ii) diversification. Diversification is the ability to spread your assets across different asset classes,
sectors, countries or issuers of securities. A diversified portfolio aims to minimize risk by offsetting
losses from some securities with gains in others.

Website: www.2cexam.com Phone: 21109644 WhatsApp:93472064 WeChat:hk2cexam P.10


Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.