CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Conservative pension-related rates assumptions include:

I. high discount rate.
II. low discount rate.
III. high rate of compensation growth.
IV. low rate of compensation growth.
V. higher assumed rate of return on plan assets.
VI. lower assumed rate of return on plan assets.
A. I, III and VI.
B. II, III and VI.
C. II, IV and VI.
Explanation: The assumptions make the plan appears less well funded.

User Contributed Comments 4

User Comment
PedroEdmundo Low discount rate, high rate of compensation and low E(ROA)
Hishy higher compensation growth rate means the plan must earn more
mrpman how does lower discount rate make the plan appear less funded? I thought adding a higher discount rate would do so.
mike_ast Lower discount rate = higher PBO, therefore it’s a more conservative measure
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