Question

4a)Which of the following are the regulators of securities market and banking industry of the HKSAR respectively?

Select one:

A. Securities and Futures Commission and Hong Kong Association of Banks

B. Monetary Regulatory Committee and Hong Kong Association of Banks

C. Hong Kong Stock Exchange and Monetary Regulatory committee

D. Securities and Futures Commission and Hong Kong Monetary Authority

b)The risk of loss resulting from the issuer failing to make full and timely payment of interest is called:

Select one:

A. credit risk.

B. liquidity risk.

C. interest rate risk.

D. systemic risk.

c)Which of the following provisions is a benefit to the issuer?

Select one:

A. Conversion provision

B. Call provision

C. Sinking fund provision

D. Put provision

d)A widening of the difference between the return on corporate bonds and on government benchmark bonds might suggest which of the following?

Select one:

A. The economy is on the brink of recession.

B. Investors should avoid government bonds.

e)Open market operations describe the process used by central banks to buy and sell bonds to:

Select one:

A. implement fiscal policy.

B. make trading profit.

C. control the monetary base.

D. issue and repay government debt.

C. Government bonds are becoming more risky compared to corporate bonds.

D. Interest rates are going to rise in future.

Answer 1

4a) option D

Securities and Futures Commission and Hong Kong Monetary Authority

4b) option A: Credit Risk

A credit risk is that risk which arises when the borrower fail to make payments for the money borrowed. The risk falls on the lender and the loss may include both principal and Interest amount.

4c) option B- Call Provision

Before the maturity date a call provision gives the right to the issuer to redeem all or a part of the bond. If the issuer's credit quality improves or if the interest rate in market declines the issuer of callable bond has the option to replace it with a cheaper bond or redeem the bond.

4d) option A - The economy is on the brink of recession.