Restricted stock is:
A)a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied.
B)a special type of stock that can be converted into corporate bonds after a specific amount of time has elapsed.
C)a special type of stock that is a result of offering an employee stock ownership plan.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

Restricted stock refers to shares of a company's stock that have limitations on when they can be sold or transferred. These limitations are usually imposed by the company as a way to incentivize long-term ownership by employees or other stakeholders. Once the restrictions are satisfied (usually based on time, performance goals, or other conditions), the stock can be freely traded like any other shares. Option B is incorrect because convertible bonds are a separate financial instrument from restricted stock. Option C is partially correct in that employee stock ownership plans (ESOPs) may include restricted stock as a component, but not all restricted stock is issued through an ESOP.

Restricted Stock Is