CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

A higher rate of compensation increase ______ service cost and ______ interest cost.

A. decreases, increases.
B. increases, decreases.
C. increases, increases.
Correct Answer: C

A higher rate increases both the service cost and interest cost (by increasing the PBO).

User Contributed Comments 2

User Comment
rodney176 How does compensation affect the discount rate ?
merc5559 It doesn't. Interest cost= PBO x Discount Rate. Higher rate of compensation leads to higher PBO which leads to higher interest cost.
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