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Unformatted text preview: defined contribution plan is a second type of plan where the employer is committed to making contributions based on a fixed formula. The employer takes contributions from its employees into a tax deferred savings account and lets the employee bear all risk and reward. 3. Why is it particularly dangerous to hold a large percentage of your investments in the stock of your employer? It is dangerous to hold a large percentage of your stocks in your employer for the same reason it is dangerous to hold a large percentage of stocks in any one company. Risk cannot be adequately diversified when a large percentage of the portfolio is in one asset. This means that you have an unnecessarily high risk on your portfolio just from holding a large percentage of stocks from your employer....
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This note was uploaded on 02/27/2008 for the course FNCE 4030 taught by Professor Madigan,ge during the Fall '07 term at Colorado.
- Fall '07