Which of the Following Is a Reason for ESOPs' Popularity

question 47

Multiple Choice

Which of the following is a reason for ESOPs' popularity?

• A) Earnings of the trust holdings are exempt from income taxes.
• B) ESOPs provide very high risk-free retirement income.
• C) Employees can use ESOPs to buy their company during financial crises.
• D) ESOPs require companies to invest 51 percent in the company's own stocks.
• E) The employees are provided with many more stocks than they actually own.

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Definitions:

Net Cash Flows

The amount of cash generated or used by a business during a given period, calculated as cash received minus cash spent.

Desired Rate

The target interest rate set by a company or investor for a specific investment or project.

Internal Rate

Often referred to as Internal Rate of Return (IRR), it's a metric used in financial analysis to estimate the profitability of potential investments.

Compound Interest

A method of interest computation that involves charging interest on the original loan or deposit amount as well as on any interest that has built up during past periods.