In Determining the Present Value of the Prospective Benefits (Often

question 79

Multiple Choice

In determining the present value of the prospective benefits (often referred to as the projected benefit obligation) , which of the following are considered by the actuary?

• A) Retirement and mortality rate.
• B) Interest rates.
• C) Benefit provisions of the plan.
• D) All of these are considered.

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Definitions:

Disposable Income

Households’ financial capacity for savings and expenditure after income tax obligations are met.

Consumption Spending

The total value of all goods and services consumed by households and individuals.

Household

A single person or a group of people living together in a single living accommodation, sharing meals or living space, and may operate as a single economic unit.

Project Financing

Arrangements used to finance mainly large capital projects such as energy explorations, oil tankers, refineries, utility power plants, and so on. Usually, one or more firms (sponsors) will provide the equity capital required by the project, while the rest of the project’s capital is supplied by lenders and lessors. The most important aspect of project financing is that the lenders and lessors do not have recourse against the sponsors; they must be repaid from the project’s cash flows and the equity cushion provided by the sponsors.