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Test Your Knowledge: Restricted Stock & RSUs Quiz
Test your knowledge of restricted stock and restricted stock units. Please answer the following 12 questions. This quiz is also a course of study. The answer key links to content on the topic for follow-up reading
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1. What is restricted stock?

A type of stock option
The collective term for a grant of stock units
A grant of company stock you must register with the SEC
A grant of company stock that you cannot sell until vesting

2. How long after grant does restricted stock usually expire?

It never expires, unless your employment ends before vesting
10 years, unless your employment ends before vesting
10 years, regardless of whether your employment ends before vesting
When you retire

3. What happens to vested restricted stock?

50% of the stock is rolled into another company benefit, usually a 401(k)
The stock becomes yours to hold or sell after a lockup period of 180 days
The stock becomes yours to hold, sell, or gift, like any other stock purchased on the open market
The company requires you to hold it for a set period, usually three years, before selling

4. When is restricted stock normally taxed?

At grant
At vesting
At grant and vesting
Never

5. Which is one difference between restricted stock and restricted stock units (RSUs)?

An RSU is one share of restricted stock
You don't get shareholder voting rights with RSUs
With RSUs, vesting must be time-based
With RSUs, you pay tax at retirement

6. What do you accomplish with a Section 83(b) election on restricted stock?

Trick question: the 83(b) election is not available for restricted stock
You choose to be taxed on the value at vesting instead of at grant
You choose to be taxed on the value at grant instead of at vesting
You choose to be taxed at grant instead of sale

7. What do you accomplish with a Section 83(b) election on restricted stock units?

The 83(b) election is not available for RSUs
You choose to be taxed at grant instead of vesting
You choose to be taxed at vesting instead of grant
You lock up the shares for the long-term capital gains holding period

8. Which of the following would probably not accelerate the vesting of restricted stock?

A stock split
A merger
An initial public offering
Your retirement

9. What types of tax withholding apply to restricted stock?

Federal, Social Security, and Medicare
Federal, state, and/or local (if any)
Social Security and Medicare
All of the above

10. When does the capital gains holding period start if you have not made the Section 83(b) election?

At grant
On the vesting date
On the day after the vesting date
When the shares show up in my account

11. How does a performance share grant differ from a standard restricted stock/RSU grant?

Performance shares are a type of stock option granted to senior executives and directors
Performance shares carry greater tax benefits than restricted stock does
Performance share vesting or payout is based on the achievement of set goals rather than length of employment
Performance shares give you a direct share in your company's profits

12. Which of the following is an example of a metric that US companies often apply to performance share grants?

Increased earnings per share
Increased total shareholder return relative to that of competitors
Revenue growth
All of the above

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