HKSI Paper 1 Practice Exam

What must promotional materials describing financial products or services include?

Celebrities testimonials Risk disclosures and must be accurate and not misleading Guarantees of returns Only legal disclaimers

Correct Answer:

Risk disclosures and must be accurate and not misleading

Explanation:

Promotional materials for financial products must present clear risk disclosures and be accurate and not misleading. This ensures investors understand the potential losses and uncertainties involved before making a decision, rather than being swayed by promises or vague statements. Risk disclosures should be easy to understand and prominently shown, reflecting the true nature of the product rather than overstating benefits or concealing downsides. Endorsements or testimonials don’t substitute for this essential information, and guarantees of returns are inappropriate because they create unrealistic expectations. Relying only on legal disclaimers is not enough; substantive risk information must be communicated.

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