Which Statement Explains the Risk Involved in "Defined Contribution Plans

question 33

Multiple Choice

Which statement explains the risk involved in "defined contribution plans"?

• A)Poor returns on the pension investments reduce the benefits for future retirees.
• B)High returns on the pension investments increase the benefit payments for the employer.
• C)The plan specifies the fixed benefits that future retirees will receive.
• D)The plan provides benefits to future retirees depending on their years of service.

---

Definitions:

Management Team

The group of individuals responsible for the strategic planning and day-to-day operations of a company.

Business Plan

A document projecting a firm’s physical and financial performance into the future. Business plans can be short or long range. Long-range plans are “strategic” and tend to be more verbal than financial. Shorter-term plans are described as “operational,” and detail the more routine running of the business.

Dividend Policy

A company's strategy or guidelines dictating how often dividends will be paid to shareholders, the form of the dividend, and how much will be distributed.

Contingencies

Potential events or conditions that may occur in the future and could impact the financial performance or operations of a business.