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Which of the Following Are Potential Benefits of a 401(k)

question 42

Multiple Choice

Which of the following are potential benefits of a 401(k) or 403(b) plan? I. You can make yourself low-interest loans.
II. You can save for retirement.
III. Your contributions to the plan are tax-free.
IV. Your contributions to the plan are tax-deferred.


Definitions:

Reserve Banking

A banking system in which banks hold a fraction of their deposits in reserve, while lending out the remainder to generate profits.

Federal Funds Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Reserve Requirement

A regulatory mandate on banks to hold a certain percentage of their deposits in reserve either in their vaults or at the central bank.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

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