The following updates have been made to your workbook edition.
Chapter 1, Section 2.3 – the last table has been amended to read:
Multiple choice question number 69 – the correct answer has been amended to: ‘B’
Multiple choice question number 70 – the correct answer has been amended to ‘B’ and the answer explanation reads:
The forward rate in one year’s time will be based on the spot rate adjusted by the relative interest rates. The formula = spot rate x (1 + quote currency interest rate/ 1 + base currency rate) so the forward rate = 1.25 x (1.015/1.010) = 1.2562.
Multiple choice question number 72 – the correct answer has been amended to: ‘D’
Multiple choice question number 88 – the correct answer has been amended to: ‘B’
Multiple choice question number 89 and the corresponding answer have been replaced with the following:
89. Which ONE of the following statements relates to the strong form of the Efficient Markets Hypothesis?
A. Future share prices can be predicted using historical share price data
B. Share prices reflect all available information known or knowable about the companies in question
C. Privately available information is not instantly reflected in share prices
D. Investors do not always process freely available information accurately
Answer: B
EMH has a number of key assumptions and the strong form purports that share prices reflect all available information known or knowable about the security in question.
Answer reference: Chapter 7, Section 1.2
Chapter 4, Section 1.3.5 has been amended to read:
1.3.5 China Trust
Main Differences Between China and Western Trusts
The development of Western trusts or international trusts (also known as ‘real trust’) has always followed the origin of trust business due to its long history, developed economic system, sound legal system and corporate governance structure. Its origin refers to a private legal agreement between settlor and trustee. The settlor and beneficiary are different individuals. This helps achieve the effect of asset isolation protection and wealth inheritance of the trust.
China Trust, founded in 1979, is a special non-bank wealth management system, which constitutes the four pillars of China’s finance sector together with banking, insurance and securities. China’s trust has developed for a short time and is limited by the imperfect economic environment and legal system and the shortage of talents. Compared with the UK and the US, China’s trust has become a financing and financial tool. It is different from international trusts: the majority of China’s trusts are self-interest trusts. This means that the trustor and the beneficiary are one person.
China’s trust plan is essentially an investment fund in nature. However, most of the funds raised by fund companies are mainly invested in standardised securities such as stocks, bonds and futures, while trust funds are usually invested in entity enterprises, which is equivalent to lending.
Trust products in China can also be regarded as a kind of debt income. Investors invest in financing parties through trust projects issued by trust companies. Within the period specified in the contract, a trust company repays the principal and interest income to the investor. This is similar to some fixed income financial products of the bank.
In 2019, the scale of entrusted assets in China’s trust industry ranked second only to banks, surpassing securities, and insurance.
The main investment directions of China trust plan are:
- Government infrastructure construction (eg, urban construction and road construction)
- Real estate (eg, commercial real estate and affordable housing construction)
- Industrial and commercial enterprise financing loans (eg, financing loans of listed companies)
These are also the most common types of trust projects in China. Three main examples of trust products in China are provided below.
Real Estate Trust

Infrastructure Construction Trust

Commercial Enterprise Trust
