Quiz

Pre-IPO Quiz

Stock compensation in pre-IPO companies can be very profitable if the company goes public or is acquired by a publicly traded company. However, the rules for equity compensation and stock in privately held companies can be tricky. See how much you have learned about equity awards at pre-IPO companies.

Please answer the following 10 questions. This quiz is also a course of study. The answer key links to content on the topic for follow-up reading.


1. How does a pre-IPO company formally determine the value of its stock?


2. How can a privately held company create liquidity for its stock?


3. Are there restrictions on the ability to resell the stock of a pre-IPO company?


4. In a privately held company, can restricted stock and stock option grants be structured so that they vest only when the company goes public or gets acquired?


5. Can privately held companies grant restricted stock or restricted stock units?


6. What are early-exercise stock options in privately held companies?


7. Why do some pre-IPO companies offer early-exercise stock options?


8. Is the date for determining taxes at exercise or vesting delayed if the stock I receive is not registered with the SEC and I cannot immediately sell it?


9. What is a lockup?


10. For pre-IPO options and stock issued under Rule 701, how long does Rule 144 require you to wait before selling the shares?

Comments on this exam? Email editors@mystockoptions.com

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