What Is the Difference Between a Defined-Contribution Plan and an RRSP

question 3

Multiple Choice

What is the difference between a defined-contribution plan and an RRSP?

• A)An RRSP has a higher contribution limit.
• B)Under a defined-contribution plan you cannot select your investment mix.
• C)Under a defined-contribution plan a contribution of up to 25 percent of gross income is allowed.
• D)An RRSP is individually funded using earned income from all sources.

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Definitions:

Issuing Corporation

The entity that offers securities for sale to investors, typically through the process of a public offering.

Secondary Market

A venue where investors buy and sell securities they already own, such as the stock market, separate from the primary market where securities are first issued.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.

Primary Market

The financial market where new securities are sold to initial buyers directly by the issuer, often through underwriting.