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| 1. Which
of the following most accurately describes the role of equity in the
total rewards package?
A. Equity-based rewards are widely used in place of paying competitive
salaries and cash incentives.
B. Equity-based rewards can offer significant wealth-building potential
to employees.
C. Equity-based rewards foster a sense of ownership without any risk
to employees. |
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2. Which
of the following equity-based reward programs is usually considered part
of the employee benefits package?
A. Employee stock awards
B. Employee stock options
C. Employee stock ownership plans |
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3. What
was the Act that introduced statutory stock options?
A. 1950 Revenue Act
B. 1976 Tax Reform Act
C. 1981 Economic Recovery Act |
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4.
Which federal agency enforces and issues rules and regulations on
securities issues such as insider trading and required disclosures?
A. Internal Revenue Service
B. Department of Labor
C. Securities and Exchange Commission |
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5. One
advantage of stock options, regardless of type, is which of the following?
A. The exercise period is unrestricted.
B. The programs are easily communicated to employees.
C. They can be used to target only key employees. |
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6. In
which of the following situations must an organization use NQSOs rather
than ISOs?
A. To reward nonemployees
B. To reward key employees
C. To reward senior management |
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7. What
is one of the reasons for a company to offer stock alternatives?
A. Shareholders
typically prefer the use of stock alternatives to other equity-based
rewards.
B. Stock alternatives provide an equity-based reward without the use
of cash resources.
C. Stock alternatives extend the financial benefits of ownership without
extending ownership privileges. |
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8. According
to recent surveys, which of the following equity-based rewards is most
commonly used?
A. Stock options
B. Restricted stock
C. Phantom stock |
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9. Employees are ineligible to participate in tax-qualified employee stock purchase plans if they possess more than what percentage of the corporation?fs voting power?
A.
1%
B.
2%
C. 5% |
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10. Which of the following are defined contribution plans?
A. Stock purchase and stock options
B. 401(k) and 403(b) plans
C. Restricted stock and performance shares |
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11.
According to the total rewards design process, equity-based reward programs
should be linked to what?
A. Competitive practices
B. Shareholder recommendations
C. Organizational mission |
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12.
Although IRC Section 423 requires broad participation for employee stock purchase plans, employers can limit participation according to what criteria?
A. Job title and/or job description
B. Salary grade
C. Minimum service and hours worked |
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13.
Which of the following are the primary administrative requirements for
most equity-based reward programs?
A. Recordkeeping and reporting
B. Data entry and communications
C. Correspondence and network administration |
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14.
Name, date, number of shares authorized and term are record-keeping requirements
typically associated with which of the following?
A. Plans
B. Participants
C. Provisions |
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15.
Underwater options are best described as stock options with an exercise
price that is what?
A. Higher than the stock's FMV
B. Equal to the stock's FMV
C. Lower than the stock's FMV |
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16.
The practice of reducing an outstanding option's exercise price
to the current fair market value of the stock is known as what?
A. Variable accounting
B. Valuing
C. Repricing |
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