What Is the Difference Between Stock Options and an Employee

question 41

Multiple Choice

What is the difference between stock options and an employee stock ownership plan (ESOP) ?

• A) Stock options carry significant risk, whereas ESOPs are risk-free.
• B) Stock options are usually granted to company executives, whereas ESOPs are provided to all employees.
• C) In stock options, stocks are placed into a trust, whereas ESOPs give employees the right to buy a certain number of shares of stock.
• D) Under stock options, employees can sell their stocks, whereas ESOPs do not allow employees to sell their stocks.
• E) Earnings from stock options are exempt from income taxes, whereas earnings from ESOPs are taxable.