CFA Practice Question

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CFA Practice Question

In an employer-sponsored defined benefit pension plan, the interest cost included in the pension expense represents the ______.

A. effective discount rate times the unamortized balance of prior service costs
B. increase in the projected benefit obligation due to the passage of time
C. increase in the fair value of plan assets due to the passage of time
Correct Answer: B

User Contributed Comments 2

User Comment
HenryQ It is calculated as discount rate * beg. PBO.
johntan1979 To be more precise, it's prior period discount rate.
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