Why Does a Tax-Deferred Retirement Account Accumulate More Money Than

question 97

Multiple Choice

Why does a tax-deferred retirement account accumulate more money than a taxable account,assuming the same amount is contributed every year and the accounts earn the same return every year?

• A)There are different investment options available for tax-deferred accounts.
• B)You can take bigger risks with assets that generate higher returns in a tax-deferred account.
• C)With tax-deferred accounts,there are no income or capital gains tax liabilities on account activity.
• D)All of the above are correct.
• E)Only A and B are correct.

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Definitions:

Coal

A combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams, used primarily as a source of energy.

Carbon Monoxide

A colorless, odorless, and poisonous gas produced by incomplete combustion of carbon-containing materials.

Ozone

A molecule made up of three oxygen atoms that occurs naturally in the Earth's stratosphere and protects life by absorbing ultraviolet radiation.

Troposphere

The troposphere is the lowest layer of Earth's atmosphere, extending from the Earth's surface up to about 8 to 15 kilometers, where most weather phenomena occur.