CEPA & CE (Social Science/Business) EXAM
PREP QUESTIONS FREQUENTLY TESTED AND
ACCURATE SOLUTIONS (2024-2025).
Which of the following would be considered a disadvantage of an ESOP?
A) ESOPs have low tax advantages for the owner
B) ESOPs are not appropriate for a company with a weak management
team
C) ESOPs require the buyout of at least 2 partners
D) ESOPs consolidate shareholder base
B) ESOPs are not appropriate for a company with a weak management team
Which of the following is considered an eligible qualified replacement
property (QRP)?
A) Bank CDs
B) Municipal bonds
C) Mutual funds
D) Convertible bonds
D) Convertible bonds
Which of the following is considered a non-eligible qualified replacement
property (QRP)?
A) Stocks
B) Convertible bonds
C) Corporate fixed rate bonds
D) Municipal bonds
,D) Municipal bonds
In an ESOP, it's common to incentivize management through "sweat
equity" such as:
A) Stock options
B) More vacation time
C) Professional development
D) All of the above
A) Stock options
What is the maximum tax deferral percentage that can be achieved
through an ESOP?
A) 10%
B) 50%
C) 70%
D) 100%
D) 100%
What is the most common application of an ESOP?
A) To transfer the business to another family member
B) To help an owner retire immediately
C) To provide liquidity for private company owners
D) To improve company culture
C) To provide liquidity for private company owners
Why should you always push an ESOP as the first exit option to be
considered by your business owner client?
A) It increases job retention of employees
,B) It provides the owner with the ability to sell up to 100% of shares at fair
market value
C) It allows an owner to retain operational and board control during
transition
D) ESOPs are not the right fit for every company and should only be
suggested depending on the client's situation.
D) ESOPs are not the right fit for every company and should only be suggested
depending on the client's situation.
After the initial step of creating the ESOP trust, what is a company's next
step in the formation process?
A) Company borrows funds from an outside lender
B) Company makes tax-deductible contributions to the ES0P
C) Company re-lends funds to the ES0P
D) Company purchases shares from selling shareholdern
A) Company borrows funds from an outside lender
Accountants, attorneys, and financial planners are all examples of
advisors that should be added to the team starting in the _____ gate of the
value acceleration process.
A) Discover
B) Prepare
C) Decide
D) Determine
A) Discover
What is a potential con of working within a team?
A) Slower production
, B) More expensive
C) More complicated
D) All of the above
D) All of the above
Specialized consultants are typically considered members of an owner's:
A) Core team
B) Extended team
C) Accountability team
D) All of the above
B) Extended team
What is not a core element of a team that makes it effective?
A) Financial Knowledge
B) Commitment
C) Trust
D) Rhythm
A) Financial Knowledge
What is the common goal of the team, no matter who is in the door first?
A) Getting the owner to do the Triggering Event
B) Set a budget
C) 90-day sprints
D) It depends on the client's preference
A) Getting the owner to do the Triggering Event
An owner's family is typically considered part of an owner's _____ .
PREP QUESTIONS FREQUENTLY TESTED AND
ACCURATE SOLUTIONS (2024-2025).
Which of the following would be considered a disadvantage of an ESOP?
A) ESOPs have low tax advantages for the owner
B) ESOPs are not appropriate for a company with a weak management
team
C) ESOPs require the buyout of at least 2 partners
D) ESOPs consolidate shareholder base
B) ESOPs are not appropriate for a company with a weak management team
Which of the following is considered an eligible qualified replacement
property (QRP)?
A) Bank CDs
B) Municipal bonds
C) Mutual funds
D) Convertible bonds
D) Convertible bonds
Which of the following is considered a non-eligible qualified replacement
property (QRP)?
A) Stocks
B) Convertible bonds
C) Corporate fixed rate bonds
D) Municipal bonds
,D) Municipal bonds
In an ESOP, it's common to incentivize management through "sweat
equity" such as:
A) Stock options
B) More vacation time
C) Professional development
D) All of the above
A) Stock options
What is the maximum tax deferral percentage that can be achieved
through an ESOP?
A) 10%
B) 50%
C) 70%
D) 100%
D) 100%
What is the most common application of an ESOP?
A) To transfer the business to another family member
B) To help an owner retire immediately
C) To provide liquidity for private company owners
D) To improve company culture
C) To provide liquidity for private company owners
Why should you always push an ESOP as the first exit option to be
considered by your business owner client?
A) It increases job retention of employees
,B) It provides the owner with the ability to sell up to 100% of shares at fair
market value
C) It allows an owner to retain operational and board control during
transition
D) ESOPs are not the right fit for every company and should only be
suggested depending on the client's situation.
D) ESOPs are not the right fit for every company and should only be suggested
depending on the client's situation.
After the initial step of creating the ESOP trust, what is a company's next
step in the formation process?
A) Company borrows funds from an outside lender
B) Company makes tax-deductible contributions to the ES0P
C) Company re-lends funds to the ES0P
D) Company purchases shares from selling shareholdern
A) Company borrows funds from an outside lender
Accountants, attorneys, and financial planners are all examples of
advisors that should be added to the team starting in the _____ gate of the
value acceleration process.
A) Discover
B) Prepare
C) Decide
D) Determine
A) Discover
What is a potential con of working within a team?
A) Slower production
, B) More expensive
C) More complicated
D) All of the above
D) All of the above
Specialized consultants are typically considered members of an owner's:
A) Core team
B) Extended team
C) Accountability team
D) All of the above
B) Extended team
What is not a core element of a team that makes it effective?
A) Financial Knowledge
B) Commitment
C) Trust
D) Rhythm
A) Financial Knowledge
What is the common goal of the team, no matter who is in the door first?
A) Getting the owner to do the Triggering Event
B) Set a budget
C) 90-day sprints
D) It depends on the client's preference
A) Getting the owner to do the Triggering Event
An owner's family is typically considered part of an owner's _____ .
