Which of the Following Statements Is True Regarding an Employee

question 11

Multiple Choice

Which of the following statements is true regarding an employee stock ownership plan (ESOP) ?

• A) Under this plan, employees acquire company shares, often at below-market prices.
• B) There exists a strong correlation between ESOPs and employee performance.
• C) The financial stake in the company is adequate to use ESOPs as an effective means to motivate employees.
• D) ESOPs are effective because, like bonuses, they reward recent performance.
• E) ESOPs are also called competency-based pay plans.

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Definitions:

IASB

The International Accounting Standards Board, responsible for developing and enforcing the International Financial Reporting Standards (IFRS).

Fair Value Measurement

An accounting approach that provides an estimate of the price at which an asset could be exchanged or a liability settled, based on current market conditions.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.