A common benchmark of repurchase obligations is to:

1. compare required repurchase obligations to future projected cash flow
2. compare required total outstanding ESOP-issued shares to total stock issued
3. compare the total level of required repurchases to the total payroll of the plan participants
4. compare the total number total ownership of an ESOP to the total ownership of the company

One reason why repurchase obligations are a bigger issue now than 30 years ago is:

1. there are more majority and 100% owned ESOPs
2. demographics in many companies are weighted by "baby boomers"
3. in some cases most or all ESOP shares have been allocated
4. all of the above

Rebalancing of ESOPs achieves which of the following:

1. ensuring that a majority of current employees receive cash
2. ensuring that a majority of retired participants receive stock
3. ensuring that a more even allocation of accounts held in cash versus stock
4. all of these

Which of the following established guidelines for how to account for ESOP repurchase obligations in a valuation?

1. the Eyler case
2. the Champlain case
3. the Armstrong case
4. none of the above

A repurchase obligation can:

1. increase risk to the company
2. decrease risk to the company
3. both a and b
4. neither a nor b

What is the effect of taking shares out of circulation?

1. an increase in value per share
2. a decrease in the number of participants in an ESOP
3. a redistribution of wealth within the ESOP among shareholders
4. a decrease in value per share

In valuing a company with an ESOP and accompanying repurchase obligation, it is helpful to focus on compensation costs because:

1. these costs often reflect the level of cash the company is likely to keep on hand
2. reasonable compensation analysis is often an indicator of how frequently a company will repurchase shares
3. compensation is a good indicator of a firm’s loyalty to its employees
4. none of the above

When an ESOP initially buys its shares it:

1. typically does so from outside shareholders
2. is required to pay a premium above fair market value
3. may underpay the fair market value price
4. both a and c

Repurchase obligation is covered in:

1. Revenue ruling 59-60
2. Section 409 of the Internal Revenue Code
3. ERISA
4. none of these

All ESOPs contain a provision that participants who:

1. reach age 65 with at least 15 years of service be given the option of diversifying up to 30 percent of their account
2. reach age 55 with at least ten years of service be given the option of diversifying up to 25 percent of their account
3. reach age 55 with at least 15 years of service be given the option of liquidating up to 55 percent of their account
4. reach age 65 with at least ten years of service be given the option of liquidating up to 45 percent of their account