1. It is a rule in place to protect the interest of minority stockholders of a target company against any scheme that dilutes share value of their investments.

A. Insider trading

B. Proxy solicitations

C. Internal Record and Keeping in Accounting Control

D. Tender offer

2. I. "Associated person of a broker or dealer" is an employee therefor whom, directly exercises control of supervisory authority, but does not include a salesman, or an agent or a person whose functions are solely clerical or ministerial.

II. "Clearing Agency" is any person who acts as intermediary in making deliveries upon payment effect settlement in securities transactions.

A. Both I and II are incorrect

B. Both I and II are correct

C. Only I is correct

D. Only Il is correct.

3. XY Corporation offers commercial papers to the public for raising funds that it needs for expansion. When an investor buys these papers or securities, he invests his money, together with the others, in XYC with an expectation of profits arising from the efforts of those who manage and operate the company. Under the Securities Regulation Code, which is correct?

A. The commercial papers are not securities under the SRC.

B. The transaction is exempt thus need not be registered.

C. XYC has to register these commercial papers with the SEC before offering them to investors.

D. XYC does not need to register these commercial papers with the SEC before offering them to investors.

4. It is a security evidenced by electronic or similar records.

A. Exchange

B. Prospectus

C. Uncertificated security

D. Pre-need plans

5. Willcorp offered what it purported to be "sans recourse" transactions wherein said investment house would match investors with pre-screened corporate borrowers in need of financial assistance. Ng Wee invested the aggregate amount of P213,290,410.36 in the "san recourse" transactions through his trustees. Prior to being matched with a corporate borrower, all the monies infused by the investors were posted in an account maintained by Willcorp. This ensures that there are enough funds to meet large drawbacks by single borrowers. The investors were induced to invest by Wincorp with promises of high yield. In Ang Wee's cases, his Confirmation Advices reveal that his funds were supposed to earn 13.5% at their respective maturity dates. The profitability of the enterprise depended largely on whether or not Willcorp on best effort basis, would be able to match the investors with their approves corporate borrowers. Are these transactions investment contracts that must be registered before being offered to the public?

A. Under the Howey Test, the transactions are actually investment contracts and thus should have been registered.

B. The transactions do not need to be registered as they are exempt transactions.

C. No, as under the Howey Test, the transactions do not qualify as an investment contract and thus need not be registered.

D. The transactions need not be registered as they involve exempt securities.

6. Under the Securities Regulation Code, information is "material nonpublic" if:

I. It has not been generally disclosed to the public and would likely affect the market price of the security after being disseminated to the public and the lapse of a reasonable time for the market to absorb the information; or

II. Would be considered by a reasonable person important under the circumstances in determining his course of action whether to buy, sell or hold a security.

A. Only Il is correct

B. Both I and Il are correct

C. Only I is correct

D. Both I and II are incorrect

7. The following are exempt securities except:

A. Security guaranteed by the Government of the Philippines

B. Own shares of stock of a bank.

C. Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic reations

D. Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory board.

8. I. As a rule, securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.

II. The following are the classes of securities under the Securities and Regulation Code: 1. Exempt transactions and securities covered by exempt transactions; and 2. Securities that are not exempt or the sale of which is not an exempt transaction.

A. Both I and II are incorrect.

B. Both I and Il are correct.

C. Only I is correct.

D. Only Il is correct.

9. The following are elements of the Howey test except:

A. A contract, transaction, or scheme

B. Investment of money

C. Expectation of profits

D. Expectation of losses

10. It is the test used to determine whether an investment contract exists or not.

A. Howey test

B. Domiciliary test

C. Relationship test

D. Nature of the controversy test

11. In this test, the existence of any of the following relationships makes the conflict intra-corporate: (1) between corporation, partnership, or association and the public; (2) between the corporation, partnership or association and the State insofar as its franchise, permit, or license to operates is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members, or officers; and (4) among the stockholders, partners or associates themselves.

A. Grandfather rule

B. Domiciliary test

C. Relationship test

D. Nature of the controversy test

12. The following relationships are "intra-incorporate controversy" except:

A. Between the corporation, partnership, or association and the State in so far as its franchise, permit or license to operate is concerned.

B. Between the corporation, partnership, or association and the public.

C. Contractual obligation for sum of money to debtors

D. Among the stockholders, partners, or associates themselves.

13. It refers to the test which dictates that the controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

A. Relationship test

B. Nature of the controversy test

C. Incorporation test

D. Domiciliary test

14. It refers to a person who acts as intermediary in making deliveries upon payment effect settlement in securities transactions.

A. Insider

B. Promoter

C. Clearing Agency

D. Salesman

15. It refers to contracts which provide for the performance of future services of or the payment of future monetary considerations at the time actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension, education, interment, and other plans which the Commission may from time to time approve.

A. Pre-need plans

B. Registration statement

C. Prospectus

D. Exchange

16. Which of the following has jurisdiction over an "intra-corporate controversy"?

A. Municipal Trial Court

B. Regional Trial Court designated as Special Commercial Court

C. Supreme Court

D. Securities and Exchange Commission

17. It refers to a person engaged in the business of buying and selling securities for the account of others.

A. Insider

B. Dealer

C. Broker

D. Issuer

18. It means many person who buys sells securities for his/her own account in the ordinary course of business.

A. Issuer

B. Insider

C. Broker

D. Dealer

19. It refers to a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of the issuer and receives consideration therefor.

A. Salesman

B. Broker

C. Insider

D. Promoter

20. It refers to the originator, maker, obligor, or creator of the security.

A. Issuer

B. Dealer

C. Insider

D. Broker