Coordinating Investments in a 401(k)plan with Investments Outside the Plan

question 96

Multiple Choice

Coordinating investments in a 401(k) plan with investments outside the plan usually

• A)involves selecting high current-return assets in plan with growth assets outside.
• B)involves selecting growth assets in plan with high current return assets outside.
• C)dictates the same proportion of growth assets to high-income assets,both in and out of plan.
• D)means having sufficient liquidity both in and out of plan.

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Definitions:

Positive NPV Projects

Projects with a net present value greater than zero, indicating they are expected to generate profit over their lifetime.

Target Cash Balance

The optimal amount of cash that a company aims to hold for operational and precautionary purposes.

Carrying Costs

Expenses associated with holding or carrying inventory, including storage, insurance, taxes, and opportunity costs.

Shortage Costs

Costs associated with the unavailability of inventory or goods, leading to lost sales, backorders, or production delays.