Which of the Following Is Not True About an ESOP

question 45

Multiple Choice

Which of the following is not true about an ESOP?

• A)An ESOP will reduce the amount of voting stock in the hands of employees.
• B)An ESOP must be a permanent trusted plan for the exclusive benefit of the employees.
• C)The plan participants become eligible for favorable taxation of distributions from the plan.
• D)Commercial lending institutions,insurance companies,and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock.
• E)An ESOP may reduce the potential of an unfriendly takeover.

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Definitions:

Differentiation Strategy

A generic business strategy that requires products to have significant points of difference to charge a higher price while targeting a broad array of market segments.

Significant Points

Major or important aspects, factors, or considerations in a given context, such as key arguments in a discussion or essential features of a project.

Market Segments

Subsections of a market composed of individuals or organizations sharing one or more characteristics that cause them to have similar product needs.

Higher Price

Refers to the increased cost of goods or services compared to previous prices or competitors' prices.