If the Potential Risk Is Significant Enough, You Might Need

question 23

Multiple Choice

If the potential risk is significant enough, you might need to take a different approach altogether, which is called risk ____.

• A) openness
• B) avoidance
• C) averaging
• D) management

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Definitions:

Cumulative Gain

The total amount of profit earned over a period of time, adding together successive gains from operations or investments.

Corridor Threshold

A term used in pension accounting that refers to the allowable range in fluctuation in the value of pension assets or liabilities; amounts outside this corridor may require amortization to keep the pension's accounting measures stable.

Pension Expense

The annual cost recognized by an employer for its contributions to employees' retirement plans, reflecting the cost of benefits earned by employees during the year.

Pension Funding

The process of allocating financial resources to a pension plan to meet future obligations to retirees.