Quiz 4

Due Dec 4, 2023 at 11:40pm

Points 100
Questions 54
Available Dec 4, 2023 at 8am - Dec 13, 2023 at 8:30am
Time Limit 40 Minutes

Instructions
-Time allowed:40 minutes

- There are 54 questions in total

-Once you start the quiz, there are no break nor pause, if you accidentally close the browser, but
open it again ASAP as the time counter still counting the time even you close the browser/logoff
during the quiz.

This quiz is no longer available as the course has been concluded.

Attempt History
Attempt Time Score

LATEST Attempt 1 29 minutes 99 out of 100

 Correct answers are no longer available.

Score for this quiz: 99 out of 100

Submitted Dec 4, 2023 at 3:38pm
This attempt took 29 minutes.

Question 1
1 / 1 pts
Which is the largest institutional investor by AuM?
Traditional institutional investors like Pension and Retirement Funds

Alternative investors like Hedge Funds


Question 2
1 / 1 pts
Demographic trends and changes in retirement patterns suggest that Social Security funding
problems will ease over the next few decades.
True

False


Question 3
2 / 2 pts
In the US, Social Security is a ________
fully funded pension plan.

federally insured private pension plan

government sponsored private pension plan.

"pay-as-you-go” system


Question 4
2 / 2 pts
Which of the following is not a proposal for insuring that sufficient funds will be available to provide
Social Security benefits to future retirees?
Provide more generous annual cost of living increases.

Raise the minimum age for receiving benefits.

Reduce the amount of future benefits.


Question 5
2 / 2 pts
A company’s pension plan promises employees a specific amount of income when they retire.
However, the plan does not have the assets to meet these future obligations to employees. This plan
represents a defined-_________ plan that is _________.
benefits; underfunded

benefits; overfunded

contribution; underfunded

contribution; overfunded

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Question 6
1 / 1 pts
A mutual fund’s board of directors picks the securities that will be held and makes buy and sell
decisions.
True

False


Question 7
2 / 2 pts
The MPF in Hong Kong is not:
Mandatory

Portable
 Government managed

Members choice

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Question 8
2 / 2 pts
One key issue for investors in collective investment funds is the costs involved. One of the metrics
used to compare funds is the TER (Total Expense Ratio). Which of the following costs is not included
in the TER?
Annual management fee

Dealing costs

Administration and legal fees

Distribution fees


Question 9
2 / 2 pts
In the US “breaking the buck” refers to a situation where:
the Euro spot price (EUR/USD) falls below 1 USD

a Money Market Mutual Fund (MMMF)’s NAV (Net Asset Value) goes below $1

the NAV of a mutual fund exceeds $1 per share


Question 10
2 / 2 pts
In Hong Kong, the SFC is responsible for
Approving retail investment products

Authorizing offering documents of retail investment products

Assessing whether a product is suitable for individual investors


Question 11
2 / 2 pts
Why does the SFC (and other regulators) worry about the rapid growth of synthetic ETFs?
They don’t understand the products

They worry that investors don’t realize they are taking counterparty exposure

They worry about systemic risk


Question 12
1 / 1 pts
Which of the below standards best protect investors?
Fiduciary duty of financial advisors
 Suitability assessment by financial advisors


Question 13
2 / 2 pts
________ intermediation means that small investors can pool their funds with other investors to
purchase high face value securities.
liquidity

financial

denomination

share


Question 14
2 / 2 pts
Mutual funds offer investors all of the following except
greater-than-average returns.

diversified portfolios.

lower transaction costs.

professional investment management.


Question 15
3 / 3 pts
Most mutual funds are structured in two ways. The most common structure is a(n) _________ fund,
from which shares can be redeemed at any time at a price that is tied to the asset value of the fund.
A(n) _________ fund has a fixed number of nonredeemable shares that are traded in the over-the-
counter market.
closed-end; open-end

open-end; closed-end

no-load; closed-end

no-load; load

load; no-load


Question 16
2 / 2 pts
Which of the following is a feature of index funds?
They have lower fees.

They select and hold stocks to match the performance of a stock index.

They do not require managers to select stocks and decide when to buy and sell.
 All of the above.


Question 17
1 / 1 pts
A defined-contribution plan promises employees a specific amount of retirement income.
True

False


Question 18
2 / 2 pts
The net asset value per share of a mutual fund is
determined by subtracting the fund’s liabilities from its assets and dividing by the number of shares outstanding.

determined by calculating the net price of the assets owned by the fund.

calculated every 15 minutes and used for transactions occurring during the next 15-minute interval.

calculated as the difference between the fund’s assets and its liabilities.


Question 19
2 / 2 pts
Which of the following pensions does NOT promise employees a specific retirement benefit?
defined-benefit plan

defined-contribution plan

overfunded plan.

underfunded plan.


Question 20
2 / 2 pts
What kind of risk are regulators increasingly worried about in relation with the fund management
industry, which the Reserve Fund crisis and the more recent crisis have highlighted, and for which
regulators are setting up new sets of regulations such as redemption gates?
Operational risk

Currency risk

Liquidity risk

Commodity risk

None of the above


Question 21
2 / 2 pts
By law, investors must be given a ______________ before they can invest in a new security.
 prospectus.

proxy statement.

fiduciary warrant.

debenture.


Question 22
2 / 2 pts
(In the US) IRAs are
individual pension plans.

government pension plans.

corporate pension plans.

public pension plans.


Question 23
2 / 2 pts
Which of the following is NOT a key element of SWFs:
Owned by the general government

Invests solely in domestic assets

Invests to achieve financial objectives

Invests on a global basis


Question 24
2 / 2 pts
In the US, which is the regulator for pension and retirement plans?
SEC

FED

Department of Labor

Department of Treasury


Question 25
2 / 2 pts
Which voluntary code of conduct did major SWFs sign?
Equator Principles

Santiago Principles

Basel Principles

New York Principles


Question 26
2 / 2 pts
When a HNWI invests in young companies to help them grow we call this
Angel investing

VC fund

PE fund


Question 27
2 / 2 pts
Your friend, who is in his final year of engineering studies at HKUST, has discovered a way of making
tele-transportation work. He is now looking to build a prototype of his machine, and asks for your
guidance in seeking funding to start his new business. Which type of financial institution would you
recommend he try?
A commercial bank

A PE fund

A seed (venture capital) fund

A mutual fund


Question 28
2 / 2 pts
In 1989 a large conglomerate, RJR Nabisco, was taken over in a highly publicized hostile takeover
involving substantial amounts of debt by a financial firm named KKR. This is an example of:
Distressed investing by a vulture fund

Seed investing by a venture capital firm

Leveraged buy-out by a private equity firm


Question 29
2 / 2 pts
Venture capital firms are usually organized as
closed-end mutual funds.

limited partnerships.

nonprofit businesses.


Question 30
1 / 1 pts
A fund that invests in companies to take them private is typically called
VC Fund
 PE fund


Question 31
3 / 3 pts
Fat Finger Capital Management manages a Global Macro hedge fund for Ultra HNWI with a 2/20 fee
structure and high watermark. Launched in 2010 the fund achieved the highest NAV of $100 per
share. At the end of the next year, due to EU sovereign debt crisis and the reach of the U.S national
debt limit, the fund’s NAV plunged to $70 per share. At the end of 2012, as the severity of EU
sovereign debt crisis subsides, the NAV rebounds to $90 per share. On which amount of gain in NAV
can the fund manager collect performance fee from the fund clients at the end of 2012?
$20

$90

$100

The fund manager cannot collect performance fee from clients


Question 32
2 / 2 pts
Which of the following are NOT common characteristics of both hedge funds and private equity
funds?
Organizational structure as partnership

Fee structure with a combination of management fee and performance fee

High denomination

High portfolio diversification

All of the above

None of the above


Question 33
2 / 2 pts
The minimum return necessary for a hedge fund manager to start collecting incentive fees is called
the:
High water mark

Beta

Alpha

Hurdle rate


Question 34
2 / 2 pts
Which of the below strategies can help hedge funds and private equity funds limit problems due to
panicked redemption demands from investors?
Lock up rules

Side pockets

Long redemption periods

All of the above

None of the above


Question 35
2 / 2 pts
If a private pension plan fails in the US, what happens to workers pensions?
They lose all their pensions

Pension liabilities are taken over by the PBGC

Pension liabilities are taken over by the Fed


Question 36
2 / 2 pts
For Hong Kong’s MPF, under the Employee Choice Arrangement (ECA), employees can:
Change their allocation choices within the employer plan

Transfer their contributions to another MPF plan of their choice

Transfer both their employers and their own contributions to another MPF plan


Question 37
2 / 2 pts
What are CAMELS ratings and what are they used for?
Credit rating agencies use them to valuate emerging countries sovereign debt risks

Credit bureaus and scoring agencies use this system to design credit scores for consumers

Fund managers use them to identify liquidity indicators

Central banks use this system in their examinations of banks to evaluate the risk of the bank


Question 38
2 / 2 pts
In the US, Reg B is intended to:
Protect the banks from default

Protect customers against discrimination

Provide customers with easily comparable information


Question 39
3 / 3 pts
The increased integration of financial markets across countries and the need to make the playing field
equal for banks from different countries led to the Basel agreement (Basel I) to
standardize bank capital requirements internationally.

reduce, across the board, bank capital requirements in all countries.

sever the link between risk and capital requirements.

do all of the above


Question 40
2 / 2 pts
Under Basel I what amount of capital do the banks have to maintain as a proportion of their risk
weighted assets?
5%

3%

8%

12%


Question 41
2 / 2 pts
Which type of risk was added in the coverage of capital requirement under Basel III?
Credit risk

Market risk

Operational risk

Counterparty risk


Question 42
2 / 2 pts
Glass-Steagall Act is an example of which type of banking regulation?
Bank supervision

Disclosure requirements

Consumer Protection

Restrictions on competition

Prudential ratios


Question 43
3 / 3 pts
One problem of the “too-big-to-fail” policy is that it _________ the incentives for _________ by big
banks.
reduces; moral hazard

increases; moral hazard

reduces; adverse selection

increases; adverse selection


Question 44
2 / 2 pts
One of the main issues US banks have with the Basel III definition of the leverage ratio is:
The level of the ratio is too high

The definition of capital is too narrow

The risk weight categories applicable to assets are too simple and not well defined

The computation of assets looks at gross asset value even if collateral and netting is available


Question 45
1 / 1 pts
Which measure did the PBOC (China’s central bank) recently introduce which is part of the
government safety net?
Deposit insurance

Lender of last resort


Question 46
2 / 2 pts
Which ratio imposed under Basel III requires banks to hold enough liquid assets to survive a severe
stress period of 30 days?
Leverage ratio

Liquidity coverage ratio

Net stable funding ratio

Reserve requirement


Question 47
1 / 1 pts
In the US, to be classified as a well-capitalized bank, a bank’s leverage ratio must exceed 8
percent.
True

False


Question 48
2 / 2 pts
Which global entity overlooks banking capitalization rules?
BCBS

HKMA

FDIC

FSB


Question 49
2 / 2 pts
Which HK regulator oversees the asset management industry?
HKMA

SFC

ICAC

MPFA


Question 50
2 / 2 pts
Which is the primary objective of the HKMA?
Issuing currency

Promote security of banking system

Maintain currency stability

Act as banker to the government


Question 51
1 / 1 pts

Which US regulator oversees the securities industry?

The Fed

The SEC

The FSOC

The FSB


IncorrectQuestion 52
0 / 1 pts

Which is the equivalent to "the US regulator oversees the securities industry" in the EU?
 ECB

ESMA

ESRB

BCBS


Question 53
1 / 1 pts

which of the below is NOT a goal of financial regulation?

Ensure adequate consumer protection

Ensure the integrity and fairness of markets

Monitor the safety and soundness of financial institutions

Ensure the stability of the overall financial system

Protect sophisticated investors


Question 54
1 / 1 pts

Which type of risk have regulators globally been trying to identify and manage through the set-up of
the Financial Stability Board and similar regional boards?

Operational risk

Systemic risk

Credit risk

Counterparty risk

Quiz Score: 99 out of 100