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FINANCIAL MARKETS/RFBT – Test Bank Part 1 [Identification; Multiple-choice; and

True/False]
1. What is R.A. 8799?

2. Which of the following is/are the rationale of enacting the SECURITIES REGULATION
CODE?
I. establish a socially conscious free market that regulates itself
II. encourage the widest participation of ownership in enterprises
III. enhance the democratization of wealth
IV. promote the development of the capital market
V. protect investors
VI. protect insider trading
VII. ensure full and fair disclosure about securities
VIII. minimize if not totally eliminate insider trading and other fraudulent or manipulative
devices and practices which create distortions in the free market.

a. None of the above

b. All of the above
c. Not given
d. All except VIII

3. These are shares, participation or interests in a corporation or in a commercial

enterprise or profitmaking venture and evidenced by a certificate, contract,
instruments, whether written or electronic in character.

4. Which of the following are the kinds of securities?

I. Debt Instruments
II. Equity Instruments
III. Investment Instruments
IV. Derivatives*
V. Trust Instruments
VI. Other instruments as may in the future determined by the Commissioner of
Internal Revenue
a. All of the above
b. Not given
c. None of the above
d. All except VI

5. Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed

securities:
a. Derivatives
b. Debt instruments
c. Not given
d. Equity instruments

6. Shares of stock, certificate of deposit for a future subscription, proprietary or non-

propriety membership certificates in corporations:
a. Equity Instruments
b. Trust instruments
c. Not given
d. Debt instruments
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7. Options and warrants:

a. Basic and Diluted EPS
b. Not given
c. Derivatives
d. Trust instruments

8. Investment contracts, fractional undivided interests in oil, gas or other mineral rights:
a. Derivatives
b. Not given
c. Catch-all [other instruments as may in the future determined by the SEC]
d. Investment Instruments

9. Certificates of assignments, certificates of participation, trust certificates, voting trust

certificates or similar certificates:
a. Investment instruments
b. Trust Instruments
c. Derivatives
d. Catch-all [other instruments as may in the future determined by the SEC]

10. This entity may be: (a) the issuer; (b) a director or officer (or any person performing
similar functions) of, or a person controlling the issuer; (c) gives or gave him access to
material information about the issuer or the security that is not generally available to
the public; (d) a government employee, director, or officer of an exchange, clearing
agency and/or self-regulatory organization who has access to material information
about an issuer or a security that is not generally available to the public; or (e) a person
who learns such information by a communication from any forgoing insiders.
a. Interlocking director
b. Insider
c. Associated person of a broker or dealer
d. Promoter

11. The selling or buying of a security by an insider while in possession of material nonpublic
information with respect to the issuer or the security.
a. Fixing
b. Red tape
c. Insider trading
d. All of the above

12. It is a government instrumentality created in 1963 by virtue of Republic Act 3591 to

insure the deposits of all banks which are entitled to the benefits of insurance.
a. PDIC
b. Investment house
c. Not given
d. SEC

13. Effective June 1, 2009, the maximum deposit insurance coverage is _______ per
depositor. All deposit accounts by a depositor in a closed bank maintained in the same
right and capacity shall be added together.

14. The latest amendments to RA 3591 are contained in _______ signed into law on May 23,
2016. The said law empowered PDIC with stronger authorities to protect the depositing
public and promote financial stability. The new law also includes important provisions to
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ensure that the PDIC remains financially and institutionally strong to fulfill its mandate
under its Charter.
15. R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking
practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined under
the Anti-Money Laundering Law.

a. All except 1
b. All except 4
c. All of the above
d. None of the above

16. The term _______ means the amount due to any bona fide depositor for legitimate
deposits in an insured bank net of any obligation of the depositor to the insured bank as
of date of closure, but not to exceed PHP500,000.00.

17. TRUE or FALSE: A joint account shall be insured separately from any individually-owned
deposit account.

18. TRUE or FALSE: Without exception, deposits of all commercial banks, savings and
mortgage banks, rural banks, private development banks, cooperative banks, savings
and loan associations, as well as branches and agencies in the Philippines of foreign
banks and all other corporations authorized to perform banking functions in the
Philippines, are insured with PDIC.

19. These are 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.

20. TRUE or FALSE: The PDIC is an attached agency of the Department of Finance.

21. It is a person who guarantees on a firm commitment and/or declared best effort basis
the distribution and sale of securities of any kind by another company.

22. It is the document made by or on behalf of an issuer, underwriter or dealer to sell or

offer securities for sale to the public through registration statement filed with the
Commission:
a. Bill of lading
b. Prospectus
c. Trust receipt
d. Not given

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

24. It is the application for the registration of securities required to be filed with the
Commission:
a. Charter and prospectus
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b. Registration statement
c. By-laws
d. Not given
25. It is a natural person, employed as such as an agent, by a dealer, issuer or broker to buy
and sell securities:
a. Salesman
b. Agent
c. Broker
d. Underwriter

26. It is an organized market place or facility that brings together buyers and sellers and
executes trade of securities and/or commodities:
a. Money market
b. Exchange
c. Capital market
d. Clearing Agency

27. It 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.

28. Which of the following is/are true?

I. "Issuer" is the originator, maker, obligor, or creator of the security.
II. "Broker" is a person engaged in the business of buying and selling securities for the
account of others.
III. "Dealer" means many person who buys sells securities for his/her own account in
the ordinary course of business.
IV. "Prospectus" is 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. I, II, III, and IV.

b. All except III.
c. Not given
d. IV only.

29. A purchase or sale made by an insider, his spouse, or relatives, shall be presumed to
have been effected while in possession of _______ if transacted after such information
came into existence but prior to public dissemination of such information.
a. material public information
b. material non-public information
c. immaterial non-public information
d. Not give
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30. Which of the following is/are true about tender offer?

I. A publicly announced intention by a person acting alone or in concert with other
persons to acquire equity securities of a “public company”.
II. It is mandatory to make a tender offer for equity shares of a public company in an
amount equal to the number of shares that the person intends to acquire in the
following circumstances: a. The person intends to acquire 15%or more of the equity
shares of a public company pursuant to an agreement made between or among the
person and one or more sellers; b. The person intends to acquire 30%or more of the
equity shares of a public company within a period of 12 months; or c. The person
intends to acquire shares that would result in ownership of more than 50% of the
equity shares of a public company.
a. All of the above
b. II only
c. I only
d. None of the above

31. TRUE or FALSE: Under R.A. No. 9576, the PDIC may propose to adjust the maximum
deposit insurance coverage, subject to the approval of the President of the Philippines,
in case of a condition that threatens the monetary and financial stability of the banking
system that may have systemic consequences.

32. Foreign currency deposits are also insured by PDIC pursuant to RA _______ (“An act
instituting a foreign currency deposit system in the Philippines, and for other purposes”)
and Central Bank (CB) Circular No. 1389. Depositors may receive payment in the same
currency in which the insured deposit is denominated.

a. 6426
b. 6420
c. 6436
d. Not given

33. PDIC LAW:

a. RA 6426
b. R.A. 9576
c. Republic Act 3591
d. RA 10846

34. Unlawful and Prohibited Acts Relating to Tender Offers:

I. To make an untrue statement of a material fact or omit to state any material fact
in order to make the statements made, not misleading.
II. To engage in any fraudulent, deceptive, or manipulative act or practices.
a. I and II
b. II only
c. I only
d. None of the above
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35. It shall be unlawful for any such beneficial owner, director, or officer, directly or
indirectly, to sell any equity security of such issuer if person selling security or his
principal: a. does not own the security sold b. if owning the security, does not deliver it
against such sale within _______ thereafter, or does not within ______ after such sale
deposit it in the mails or other usual channels of transportation.
a. 1 month; 30 days, respectively.
b. 25 days; 5 days, respectively.
c. 20 days; 5 days, respectively.
d. Not given

36. TRUE or FALSE: Prohibition does apply to a dealer in the ordinary course of his business
and incident to the establishment or maintenance by him of a primary or secondary
market, otherwise than in an Exchange, for such security.

37. Securities deposited may be withdrawn at any time throughout the period that the
tender offer remains open and if deposited have not been previously accepted for
payment, and at any time after _______ from the date of the original tender offer or
request or invitation.
a. 60 days
b. 2 months
c. 30 days
d. 10 days

38. TRUE or FALSE: As for Philippine banks with branches outside the country, RA 9576
stipulates that, subject to the approval of the Board of Directors, any insured bank with
branch outside the Philippines may elect to include for insurance its deposit obligations
payable at such branch.

39. Depositors with valid deposit accounts with balances of _______ are not required to file
claims provided they have no obligations with the closed bank and have complete and
updated addresses in the bank records or have updated these through the Mailing
Address Update Form (MAUF) issued by the PDIC.
a. PHP100,000 and below
b. PHP500,000 and below
c. PHP500,000
d. Not given

40. Claims are filed during the claims settlement operations period, as announced in the
Notice to Depositors published in national or local newspapers. Depositors have
_______ to file their deposit insurance claims.
a. Two (2) years from PDIC’s takeover of the closed bank
b. Five (5) years from PDIC’s takeover of the closed bank
c. One (1) year from PDIC’s takeover of the closed bank
d. Not given
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41. Based on the PDIC Law - Who are required to file claims?
1. Depositors with valid deposit accounts with balances of more than PHP100,000.
2. Depositors who have outstanding obligations with the closed bank regardless of
amount of deposits.
3. Depositors with account balances of less than PHP100,000 who have no updated
addresses in the bank records or who have not updated their addresses through the
Mailing Address Update Form (MAUF) issued by the PDIC.
4. Depositors who maintain their accounts under the name of business entities,
regardless of type of account and account balance.
5. Depositors with accounts not eligible for early payment, regardless of type of account
and account balance per advice of PDIC.
a. All except 1
b. All except 5
c. Not given
d. All of the above

42. Which of the following is/are not correct?

1. Claims should be filed within the two-year prescriptive period after PDIC’s takeover of
the closed bank.
2. The PDIC will not accept claims that are incomplete or lacking in requirements.
3. The PDIC may also require additional documents in the course of claims processing.
4. The PDIC, as Receiver, has the authority to adjust the interest rate on unpaid interests
on deposits if such rate is deemed unreasonably higher compared to market rates.
5. The standard procedures for claims settlement may not apply if the closed bank fails
to properly turn over to the PDIC the closed bank’s complete records. Without the
complete records, the PDIC will not be able to conduct the validation process for bank
deposits, a requirement before deposit insurance claims are paid.
a. All of the above
b. None of the above
c. 5 only.
d. All except 5.

43. Under the PDIC rules, who should sign the Claim Form?
1. DEPOSITOR of the account - for depositors 18 years old and above
2. PARENT - if the depositor is below 18 years old
3. AGENT - in the case of “By” accounts
4. TRUSTEE - in the case of “In Trust For (ITF)” accounts
5. EACH DEPOSITOR - in the case of joint accounts such as “Or”, “And/Or” or “And” accounts
a. All of the above
b. None of the above
c. All except 5.
d. Except 4 and 5.
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44. Under the PDIC Law – On claims, what are the required documents?
a. Original evidence of deposits such as savings passbook, certificate of time
deposit, bank statement, unused checks, and ATM card.
b. Two (2) valid photo-bearing IDs with signature of the depositor/claimant.
c. Three (3) valid photo-bearing IDs with signature of the depositor/claimant.
d. a and b
45. LAW ON SECRECY OF BANK DEPOSITS:
a. R.A. 1205
b. R.A. 3936
c. R.A. 1305
d. R.A. 1405

46. INSOLVENCY LAW:

a. Act No. 1956
b. Act No. 1946
c. Act No. 1856
d. Not given

47. Types of bond or other debt instrument that is unsecured by collateral:

a. Put option
b. Call option
c. Debentures
d. Callable bonds

48. Where investors buy and sell securities they already own:
a. Secondary Markets
b. IPO
c. Banks
d. Not given

49. The sale of new or closely held shares by a company that has already made an initial
public offering (IPO):
a. Secondary public offering
b. IPO
c. Stock exchanges
d. Not given

50. The first issuance of stock from a private company for public sale:
a. Stock exchange
b. Primary public offering
c. LIBOR
d. Primary markets
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51. The right of existing shareholders in a corporation to purchase newly issued stock before
it is offered to others:
a. Real right
b. Personal right
c. Pre-emptive right
d. Not given

52. A bid to purchase some or all of the shareholders' stock in a corporation:

a. Tender offers
b. Preemptive right
c. Right of first refusal
d. Visitorial power of the state

53. REPUBLIC ACT NO. 8792 is also called the:  

a. AMLA
b. Electronic Commerce Act of 2000
c. The Truth in Lending Act
d. Not given

54. An initial public offering, or IPO, is an example of a _______ market. These trades
provide an opportunity for investors to buy securities from the bank that did the initial
underwriting for a particular stock:
a. Secondary
b. Primary
c. Financial
d. Capital

55. Examples of popular _______ markets are the National Stock Exchange (NSE), the New
York Stock Exchange (NYSE), the NASDAQ, the London Stock Exchange (LSE), PSE, etc.:
a. Primary
b. Secondary
c. Wet
d. Dry

56. It is a contract or legal document that records the obligations of the bond issuer and the
benefits that will be given to the bondholder. This may also be called a bond resolution,
a bond contract, or a deed of trust. It is a contract that is blanket and unconditional:
a. Debentures
b. Bond indenture
c. Articles of incorporation
d. Public instrument

57. AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH

EXTENSIONS OF CREDIT. This Act is the:
a. The Insolvency Act 1986
b. Truth in Lending Act
c. Not given
d. Financial Rehabilitation and Insolvency Act of 2010, (FRIA)

58. TRUE or FALSE: A stay order is sometimes essential to the survival of a distressed
company. A stay order keeps at bay the pack of unhappy and understandably impatient
creditors and prevents them from tearing apart and bringing about the certain death of
the helpless company.
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59. The petitioner shall immediately serve a copy of the stay order on the Rehabilitation
Receiver appointed by the court, who shall manifest his acceptance or non-acceptance
of his appointment not later than _______:
a. Ten (10) days from receipt of the order
b. Twenty (20) days from receipt of the order
c. Five (5) days from receipt of the order
d. Not given

60. TRUE or FALSE: The Rehabilitation Receiver shall be considered as an officer of the
court. He shall be primarily tasked to study the best way to rehabilitate the debtor and
to ensure that the value of the debtor's property is reasonably maintained pending the
determination of whether or not the debtor should be rehabilitated, as well as
implement the rehabilitation plan after its approval.

61. According to IAS 7, cash equivalents include short-term, highly liquid investments, which are (1)
readily convertible to known amounts of cash, and (2) so near their maturity (original maturities
of three months or less) that they present negligible risk of changes in value arising from
changes in interest rates. The following are examples of cash equivalents:

1. Treasury bills
2. commercial paper
3. money market funds
a. All except 1
b. None of the above
c. 1 and 3 only.
d. All of the above
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ANSWER KEY:
1. SECURITIES REGULATION CODE [SRC]
2. c – All except VI
3. Securities
4. d
5. b
6. a
7. c
8. d
9. b
10. b
11. c
12. a
13. PHP500,000
14. RA 10846
15. c
16. insured deposit
17. True
18. False - Except for the exclusions stipulated in RA 9576, deposits of all commercial banks,
savings and mortgage banks, rural banks, private development banks, cooperative
banks, savings and loan associations, as well as branches and agencies in the Philippines
of foreign banks and all other corporations authorized to perform banking functions in
the Philippines, are insured with PDIC.
19. Pre-need plans
20. True
21. Underwriter
22. b
23. Uncertificated security
24. b
25. a
26. b
27. Associated person of a broker or dealer
28. c – All except IV ["Promoter" is 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].
"Prospectus" is the document made by or on behalf of an issuer, underwriter or dealer
to sell or offer securities for sale to the public through registration statement filed with
the Commission.
29. b
30. a
31. True
32. a
33. b
34. a
35. c
36. False - Prohibition does NOT apply to a dealer in the ordinary course of his business and
incident to the establishment or maintenance by him of a primary or secondary market,
otherwise than in an Exchange, for such security.
37. A
38. True
39. a
40. a
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41. d
42. b
43. a
44. d
45. d
46. a
47. c
48. a
49. a
50. b
51. c
52. a
53. b
54. b
55. b
56. b
57. b
58. True
59. a
60. True
61. d