Paper 11 Exam Study Guide (2026)
Everything the HKSI LE Paper 11: Corporate Finance tests, topic by topic: what each section covers, the facts that come up most, and how to study it. Pair it with the free 15-question practice test.
The exam at a glance
| Questions | 40 multiple-choice questions |
|---|---|
| Time | 90 minutes |
| Passing score | 70% |
| Format | Closed book, computer-based |
| Certifying body | Hong Kong Securities and Investment Institute (HKSI Institute) |
| Test provider | HKSI Institute computer-based test centre in Hong Kong, or Prometric centres outside Hong Kong |
Mind map: the whole exam on one screen
Read the complete Paper 11 study notes for “Corporate Finance Industry Overview”
Our first full set of comprehensive notes, about 10 minutes of reading: What corporate finance is · Characteristics of financial markets · Instruments: equity, debt, hybrids and derivatives · Types of organisation · Problems, ethics and governance, a worked exam example, the traps examiners use and a one-minute recap. Create a free account to read it and see how premium notes work before you decide.
1. Corporate Finance Industry Overview
What corporate finance is, who the players are and the problems the industry faces.
Key facts
- Corporate finance intermediation matches savers with users of funds: direct financing uses securities such as bonds and shares, indirect financing uses intermediaries such as banks.
- Markets are classified by maturity (money versus capital), function (primary versus secondary) and instrument (equity, debt, hybrid, derivative).
- Liquidity and quality control (disclosure, accounting standards, regulation) keep markets efficient; globalisation links markets but also spreads shocks.
- Sole proprietors and general partners have unlimited personal liability; a company is a separate legal person with limited liability for shareholders.
- Regulation and efficient markets reinforce each other: fair, well-enforced rules build investor confidence and lower the cost of capital.
- Industry failures stem from conflicts of interest, weak ethics, poor corporate governance and audit or accounting breakdowns.
Flashcards
Exam tip: Know the liability implications of each type of organisation; they are easy marks.
2. Accounting and Financial Statement Analysis
Accounting principles, the main statements and ratio analysis.
Key facts
- Key assumptions and principles: accruals, going concern, consistency and prudence.
- Hong Kong Financial Reporting Standards align with international standards, supporting comparability.
- The statement of financial position, income statement and cash flow statement interrelate; cash flow splits operating, investing and financing activities.
- Read the notes: creditors, accruals, provisions, contingencies, segment reporting and related-party transactions.
- Cosmetic accounting (window dressing, early revenue recognition, off-balance-sheet items) makes statements less reliable.
- Core ratios: current ratio, gearing, interest cover, profit margin and return on equity.
Flashcards
Exam tip: Read the notes to the accounts; questions often test what they reveal about risk.
3. Principles of Corporate Finance
Risk and return, time value of money, capital budgeting and corporate collapse.
Key facts
- Time value of money: a dollar today is worth more than a dollar tomorrow because it can earn interest; discounting converts future cash flows to present value.
- NPV decision rule: accept projects with a positive NPV; IRR is the discount rate at which NPV is zero.
- Cost of equity can be estimated with the dividend growth model or CAPM; debt is usually cheaper but adds financial risk.
- Financial leverage magnifies both gains and losses; capital structure balances the tax benefits of debt against distress risk.
- Capital budgeting: generate proposals, screen, analyse project cash flows including working capital, then select, approve and monitor.
- Warning signals of collapse include falling margins, rising gearing, weak cash flow and audit qualifications; responses include restructuring, refinancing or insolvency proceedings.
- Infrastructure finance uses project structures that allocate completion, operating and political risks to the party best able to bear them.
Flashcards
Exam tip: Practise discounting one-year and two-year cash flows; NPV questions are pure arithmetic.
Test yourself on these topics
Take the free 15-question Paper 11 test, then save your results to unlock your Readiness Score and the mistakes bank.
4. Equity Financing
Equity instruments, the capital-raising process and venture capital.
Key facts
- Ordinary shares carry voting rights and a residual claim; preference shares rank ahead for dividends and on liquidation but usually carry no votes.
- Cumulative preference shares accumulate unpaid dividends; non-cumulative shares do not.
Flashcards
Exam tip: Learn the sequence of an IPO: sponsor, prospectus, vetting, marketing, allocation, listing.
5. Debt Financing
Loan and bond types, debt structuring and securitisation.
Key facts
- Debt can be short or long term, secured or unsecured, fixed or floating rate, drawn or standby, and bilateral or syndicated.
- Bullet repayment repays principal in one sum at maturity; credit foncier amortises principal and interest in instalments.
Flashcards
Exam tip: Match the debt structure to the borrower's cash flow profile; that logic drives most answers.
6. Business Valuation
Valuation approaches, industry analysis and special situations.
Key facts
- A valuation is a point-in-time opinion; a professional valuation states its purpose, methodology and assumptions objectively.
- Main approaches: discounted cash flow, comparable companies or transactions multiples, and asset or net asset value.
Flashcards
Exam tip: Name the valuation approach and its assumptions; the exam rewards method, not just the number.
7. Mergers and Acquisitions
Takeover motives, structures, strategies and the Takeovers Code.
Key facts
- Motives include synergy, economies of scale, market share, diversification and buying undervalued targets.
- Offers may be in cash, shares or a mix; the Hong Kong Code on Takeovers and Mergers governs offers for Hong Kong public companies.
Flashcards
Exam tip: The 30/2 rule and the six-month highest price rule appear in almost every sitting; know both cold.
How to pass
- 40 questions in 90 minutes is about 2 minutes each, so you have time to work the calculations.
- You need 70%: 28 out of 40, so you can miss up to 12.
- Know the Takeovers Code numbers cold: the 30% trigger, the 2% creeper and the six-month highest price rule.
- Ratio and NPV questions are quick marks if you know the formulas. Practise current ratio, interest cover and simple discounting until they are fast.
Frequently asked questions
How long should I study for the Paper 11 exam?
Most working candidates need 4 to 8 weeks at 45 to 60 minutes a day. Book your exam once your Readiness Score has stayed at 80 or higher for about a week.
Can I take the Paper 11 exam online?
Yes. Paper 11 can be taken at the HKSI Institute's computer-based test centre in Hong Kong or, for candidates outside Hong Kong, at a Prometric centre (higher fee). Format: closed book, computer-based. Check the HKSI Institute's current candidate information for the rules.
What score do I need to pass the Paper 11 exam?
70%. The exam has 40 multiple-choice questions and a time limit of 90 minutes.
What are the most tested topics?
The outline covers corporate finance industry overview, accounting and financial statement analysis, principles of corporate finance, equity financing, debt financing, business valuation, mergers and acquisitions. Use the free practice test to see which ones you need most.
The premium Paper 11 study path
Premium Paper 11 prep is studied one topic at a time. Each step starts with that topic's key notes and flashcard deck, then its own question sets of 25, so you master one topic before you move to the next. When every topic is strong, the 6 full mock exams show you're ready.
Your step-by-step study path
- 1Corporate Finance Industry Overview9 key notes, 115 flashcards, then 450 practice questions in 18 sets of 25Notes free with an account
- 2Accounting and Financial Statement Analysis9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25Premium
- 3Principles of Corporate Finance9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25Premium
- 4Equity Financing9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25Premium
- 5Debt Financing8 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25Premium
- 6Business Valuation8 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25Premium
- 7Mergers and Acquisitions8 key notes, 110 flashcards, then 425 practice questions in 17 sets of 25Premium
- Final step: 6 full mock exams50 questions each, timed like test day. Pass them, then book your exam.Premium
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Summarized from the HKSI Institute's official candidate information and the rules cited, checked October 2026. Confirm current requirements with Hong Kong Securities and Investment Institute (HKSI Institute).