There Are Two Types of Pension Plan

question 139

Multiple Choice

There are two types of pension plan. In a defined contribution plan, a company contributes a specific amount of money, often based on profits, to a fund owned by its employees. In a defined benefit plan, the company promises to make specific lifetime payments to its employees when they retire. The payments depend on each employee's pay at retirement, years of service, and expected lifespan. Eugene F. Brigham, Financial Management: Theory and Practice

• A) Nonargument.
• B) Argument; conclusion: In a defined benefit plan ... when they retire.
• C) Argument; conclusion: In a defined contribution plan ... owned by its employees.
• D) Argument; conclusion: The payments depend ... expected lifespan.
• E) Argument; conclusion: There are two types of pension plan.

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