The correct answer "It depends" isn't available as an option.

How many rows are produced depends on the IMPLICIT_TRANSACTIONS setting.

If ANSI_DEFAULTS or IMPLICIT_TRANSACTIONS have been set on, this code will produce no rows (just an error message for the third insert, which is an attempt to insert into a nonexistent table). The BEGIN TRAN statement won't open a transaction because there is already an active transaction.

But most connections default to autocommit mode ( so IMPLICIT_TRANSACTIONS is off) so the code will produce 2 rows, as in the supposedly correct answer.

As no rows wasn't an option, it was possible to deduce that IMPLICIT_TRANSACTIONS had to be OFF so that the 2-row answer was the one expected by the person who set the question.