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.

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Definitions:

Rational Emotive Behavioral Therapy

A form of cognitive-behavioral therapy founded by Albert Ellis, focusing on identifying irrational beliefs to change emotional and behavioral responses.

Albert Ellis

A prominent psychologist known for developing Rational Emotive Behavior Therapy (REBT), a form of cognitive-behavioral therapy.

Cognitive-Behavioral Therapist

A mental health professional specializing in cognitive-behavioral therapy, focusing on changing negative thoughts and behaviors to improve mental health.

Irrational Thoughts

Thoughts that are not based on reason or logic, often leading to negative and unrealistic outcomes or beliefs.