Which of the Following Statements Is True of Employees Who

question 41

Multiple Choice

Which of the following statements is true of employees who choose the Roth version of employee payroll-deduction retirement plans?

• A) Their incomes are tax deductible, and the earnings on these investments are tax deferred.
• B) They pay taxes on the income they contribute, but earnings on these contributions are tax exempt.
• C) They must pay taxes on funds distributed from their fund when they make withdrawals.
• D) Their incomes are tax-free, but withdrawals are subject to state taxes.

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Definitions:

Equally-Weighted Portfolio

An investment portfolio where each asset is allocated the same proportion of the total investment.

Securities

Assets indicating ownership in a company available on the stock market, indebtedness to either a corporate or government issuer, or entitlements to ownership through an option.

Two-Factor Economy

An economic model that considers two distinct factors or variables influencing outcomes, often used in finance to analyze returns or risks.

Expected Return

The average return an investor anticipates receiving on an investment if it is held for a specific period of time.