SRC Quiz
Questions: 16 · 10 minutes
1. A transaction qualifies for an exemption from registration. Which statement is generally most accurate?
The transaction is automatically endorsed by the regulator
The exemption does not generally authorize fraud or material misrepresentation
The seller no longer needs to provide any truthful information
The security is guaranteed to be suitable for every investor
2. A trader posts a knowingly false claim that a listed company has secured a major contract, waits for the share price to rise, and then sells. What is the clearest regulatory concern?
The trader sold shares for a gain
The statement appeared on social media rather than in a prospectus
The trader used a false material statement to influence market activity
The company’s shares were already publicly traded
3. A promoter collects money from many people, pools it into a managed venture, and promises profits mainly from the promoter’s work. Which regulated concept does this most closely resemble?
An ordinary consumer purchase
A secured bank deposit
A charitable contribution
An investment contract
4. A financial firm agrees to help an issuer distribute a new securities offering to investors. Which role most closely describes the firm?
Transfer agent
Underwriter
Beneficial owner
Independent retail shareholder
5. A company plans to offer its shares broadly to the public, and no exemption applies. What is the most appropriate regulatory step before the sale?
Comply with applicable registration and disclosure requirements
Begin selling, then disclose the terms after demand is known
Obtain approval from every existing shareholder instead of filing disclosures
Ask the stock exchange to guarantee the shares
6. What is a central purpose of the Securities Regulation Code?
To set the market price of every publicly traded security
To guarantee that registered investments will earn a profit
To protect investors and promote fair, efficient, and transparent markets
To replace company law for all Philippine businesses
7. What is the primary securities-market function of an exchange?
To provide an organized marketplace operating under trading and listing rules
To insure investors against declines in listed securities
To lend money directly to every listed company
To determine the intrinsic value of every listed share
8. What does registration of a securities offering most accurately indicate?
The regulator has guaranteed the issuer’s future performance
The security has been judged suitable for every investor
The offering cannot later be affected by market volatility
Applicable filing and disclosure requirements have been addressed, not that the investment is guaranteed
9. Which fact is most likely to be considered material to an investor?
Only information involving a company’s physical property
Any fact mentioned during an informal staff conversation
Only information that changes a security’s price on the same day
Information a reasonable investor would likely consider important when deciding whether to buy, sell, or hold
10. What is the main function of a prospectus in a registered securities offering?
To replace all continuing disclosure obligations after the offering
To certify that the security cannot lose value
To establish the future trading price of the security
To provide investors with material information about the issuer, offering, and risks
11. Which participant is acting as a dealer rather than a broker?
A firm executing a customer’s order as the customer’s agent
A business regularly buying and selling securities for its own account
A transfer agent updating the issuer’s ownership records
A consultant giving general financial education
12. An acquirer publicly invites shareholders of a company to sell their shares at stated terms during a specified period. What transaction does this most closely describe?
A stock split
A dividend declaration
A tender offer
An exchange listing application
13. Which activity best fits the Securities and Exchange Commission’s role under securities regulation?
Administering and enforcing registration, disclosure, and market-conduct requirements
Setting guaranteed returns for publicly offered securities
Collecting personal income tax on every investor’s salary
Insuring all brokerage accounts against investment losses
14. A corporate officer learns that an unannounced acquisition is likely to occur and buys shares before the news becomes public. What is the main SRC concern?
The officer traded while possessing material nonpublic information
The officer purchased shares in the secondary market
The acquisition could increase the company’s size
The officer did not buy the shares directly from the issuer
15. Two accounts controlled by the same trader repeatedly buy and sell the same security to create the appearance of heavy activity without a genuine change in ownership. What does this most closely illustrate?
A legitimate tender offer
Ordinary portfolio rebalancing
A wash trade used for market manipulation
A primary-market subscription
16. An investor buys existing shares from another investor through an exchange. In which market does this transaction occur?
The primary market, because shares are involved
The secondary market, because existing securities are changing hands
The commodities market, because the price can fluctuate
The private placement market, because the issuer receives no proceeds