Asked by Yassine Wydadi on Jul 11, 2024
Verified
An employee stock ownership plan (ESOP)is a tax-qualified retirement benefit plan that borrows money and uses the cash proceeds to buy a company's stock.
Employee Stock Ownership Plan (ESOP)
A program that allows employees to own a stake in the company they work for, typically through the allocation of stock shares.
Tax-Qualified
Pertains to financial accounts or plans that meet government standards for receiving tax advantages.
Retirement Benefit Plan
A financial arrangement designed to provide individuals with an income or benefits upon retirement, often sponsored by employers or governments.
- Identify the different types of venture capital, including their structure and operational mechanisms.
Verified Answer
MB
Manuel Baylon-PadillaJul 11, 2024
Final Answer :
True
Explanation :
This statement is true. An ESOP is a type of retirement plan that allows employees to become owners of the company through the purchase of company stock using borrowed funds. The ESOP trust holds the stock until the employee retires or leaves the company, whereupon it is sold back to the company or to another buyer. ESOPs can provide a tax-efficient way for business owners to transfer ownership to their employees.
Learning Objectives
- Identify the different types of venture capital, including their structure and operational mechanisms.