Both Employers and Employees May Contribute to Defined Contribution Plans

question 51

True/False

Both employers and employees may contribute to defined contribution plans. However, the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.

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Definitions:

Expected Return

The predicted yield or gains an investor anticipates on an investment, based on historical or statistical measures.

Efficient Frontier

A concept in modern portfolio theory representing a set of optimal investment portfolios that offer the highest expected return for a defined level of risk.

Probability Distribution

A function in statistics that identifies and quantifies all plausible values and their chances of occurrence for a random variable over a specific range.

Portfolio

A group of investments that comprise stocks, bonds, commodities, along with cash and cash equivalents such as mutual funds and exchange-traded funds (ETFs).