Pension Plans Can Be Thought of as the Opposite of Life

question 48

Multiple Choice

Pension plans can be thought of as the opposite of life insurance because life insurance:

• A) costs far more than pension plans.
• B) companies spread risk while pension plans are only spread within the company.
• C) pays off when you die while the pension plan pays off if you don't.
• D) pools the savings of many and pension plans do not.

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Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price of a stock by its earnings per share, indicating the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings.

Common Stock

Equity ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends when declared.

Market Price

The present cost at which a product or service can be purchased or sold on the market.

Return on Total Assets

A measure of profitability that indicates how efficiently a company is using its assets to generate earnings.