Which of the Following Statements Is True with Regard to Defined

question 40

Multiple Choice

Which of the following statements is true with regard to defined benefit and defined contribution pension plans?

• A)It's easier for an employer to determine its annual pension contribution under a defined benefit plan than under a defined contribution plan.
• B)When a new pension plan is installed,it's more beneficial for older workers if it's a defined contribution plan rather than a defined benefit plan.
• C)The employer bears the investment risk under a defined contribution plan,and the employee bears the investment risk under a defined benefit plan.
• D)With a defined benefit plan,the retirement benefit is known is advance but the contributions vary;with a defined contribution plan,the contribution rate is fixed but the retirement benefit varies.

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Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity.

Inventory Turnover

A financial metric indicating how many times a company has sold and replaced inventory over a given period.

Fixed-Asset Turnover

A financial ratio that measures a company's ability to generate sales from its fixed assets.

ROA

Return on Assets; a financial ratio indicating how profitable a company is relative to its total assets.