1, ESOPs have been used by companies to liquidate a large block of company stock held by an individual or small group of people.
True or False?
2, An important concern for ESOP participants is that their overall investments (both financial and human capital) reflect adequate diversification.
True or False?作者: Windjam 时间: 2011-7-11 19:54
T, T after rereading question.
I don't get the wording it makes no sense.
ESOPS are very undiversified and represent huge amounts of the net worth of the participants. HC/FC highly correlated. Must use other methods to diversify.
Edited 2 time(s). Last edit at Monday, May 23, 2011 at 08:46PM by Paraguay.作者: mar350 时间: 2011-7-11 19:54
1T
2 im not sure what u are asking, are u asking if they should be concerned ( then yes) or are u asking are they being concerned by participation (then no)
in any case i have to choose one so
F作者: Unforseen 时间: 2011-7-11 19:54
1. True
2. False作者: Zestt 时间: 2011-7-11 19:54
I would say false and true.
A company is not liquidating stock. The company actualluy buys the stock in the open market to push up the price.
Secondly for an ESOP plan, Diversification can become an issue, as a person can tie up too much of his financial capital in company stock, which is related to his human capital as well作者: bpdulog 时间: 2011-7-11 19:54
Paraguay Wrote:
-------------------------------------------------------
> bpdulog Wrote:
> --------------------------------------------------
> -----
> > 1. True
> > 2. False - If they were concerned about
> > diversification, why are they in an ESOP in the
> > first place?
>
> The free money part of it is key. Generally if
> you are going to give me money for working
> somewhere I will take it.
Good point, but that seems like a secondary issue.
Their human capital is reliant on their employer, and through the ESOP, so is their financial capital.
NO EXCUSES作者: oneboy 时间: 2011-7-11 19:54
ananda2 Wrote:
-------------------------------------------------------
> I would say false and true.
>
> A company is not liquidating stock. The company
> actualluy buys the stock in the open market to
> push up the price.
>
> Secondly for an ESOP plan, Diversification can
> become an issue, as a person can tie up too much
> of his financial capital in company stock, which
> is related to his human capital as well
1 is definitely true. Main purpose of an ESOP is to purchase a concentrated position from owners or founders on favorable tax terms. Generally there is a buttload of leverage involved as well.作者: mik82 时间: 2011-7-11 19:54
Paraguay, your answer is the answer. Thanks for the explanation.
2. is from book2, p379....agreed, a wording problem.作者: canadiananalyst 时间: 2011-7-11 19:54
true
true
their overall investments (both financial and human capital) reflect adequate diversification.should understand to be should reflect.作者: Colum 时间: 2011-7-11 19:54
3, Disintermediation can occur when policyholders borrow against the accumulated cash value in insurance products, or the policyholders surrender their cash value life insurance policies for their accumulated cash values.
True or False?
4, Life insurance companies are particularly sensitive to the losses that can result during periods of rising interest rates. In these situations, the existence of valuation reserves alone is sufficient to prevent a write-down of surplus.
True or False?作者: bodhisattva 时间: 2011-7-11 19:54
3 true
4 false作者: Windjammer 时间: 2011-7-11 19:54
True, although assets longer in a lot of casualty but varied.
False, long term asset curve.
Did you edit longer to shorter or can I not read right now?
Edited 3 time(s). Last edit at Monday, May 23, 2011 at 10:48PM by Paraguay.作者: justin88 时间: 2011-7-11 19:54
5-true
6-false , longer maturities(15-20year?) to be tax free作者: lcai 时间: 2011-7-11 19:54
Aside from the last question... Are those questions LOS questions?? Because I don't really recall any of those... Worries me lol作者: dyga 时间: 2011-7-11 19:54
Soccertom9 Wrote:
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> Can someone tell me where this is in the CFAI
> material? Thx.
It is all taken directly from the institutional investment section. Almost word for word.作者: IAmNeil 时间: 2011-7-11 19:54
Paraguay Wrote:
-------------------------------------------------------
> Soccertom9 Wrote:
> --------------------------------------------------
> -----
> > Can someone tell me where this is in the CFAI
> > material? Thx.
>
>
> It is all taken directly from the institutional
> investment section. Almost word for word.
Your mem is amazing! I dont recall them at all
Need to take Omega 3 oil
