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1. All of the following are potential disadvantages to the use of company stock as an investment option under a defined contribution plan EXCEPT :
1. All of the following are potential disadvantages to the use of company stock as an investment option under a defined contribution plan EXCEPT:
- Employer stock is a completely undiversified investment option and may be inappropriate from a financial perspective.
- Employee relation problems may surface if the value of the employer stock declines.
- If significant balances are built up in the company stock fund, employees may have not only their livelihood but also a sizable block of their savings tied to the well-being of their company
- Any investment in employer stock must satisfy the requirement that plan assets be expended for the exclusive benefit of employees.
- Employer stock ownership can make a company more vulnerable to takeover attempts.
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