When an Employer Promises to Set Aside a Certain Amount

question 65

Multiple Choice

When an employer promises to set aside a certain amount of money for each employee each year, it has set up a

• A) Defined-benefit plan.
• B) Money-purchase plan.
• C) Profit-sharing plan.
• D) Salary-reduction plan.
• E) Stock bonus plan.

---

Definitions:

Periodic Payment

Payments made or received regularly over a specific period, often monthly or annually.

GIC

In Canada, a Guaranteed Investment Certificate is a type of investment that guarantees a fixed return rate over a certain period.

Compounded Annually

Interest on an investment calculated once a year, where each year's interest adds to the principal.

GIC

Guaranteed Investment Certificate, a Canadian investment that offers a guaranteed rate of return over a fixed period of time, usually with higher interest rates for longer terms.