In Regards to the Defined-Benefit Pension Assets Under Its Control

question 9

Multiple Choice

In regards to the defined-benefit pension assets under its control, a plan sponsor chooses ________.

• A) to use out-of-house staff to manage all the pension assets itself.
• B) to use in-house staff to manage part of the pension assets.
• C) to distribute the pension assets to one money management firm to manage.
• D) to distribute the pension assets to one or more money management firms to manage.

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Definitions:

Expected Utility Function

A mathematical representation of a decision-maker's preference over uncertain outcomes, emphasizing the expected level of satisfaction or value.

Probability

A numerical assessment between 0 and 1 indicating how probable it is for an event to take place.

Expected Value

The weighted average of all possible values of a random variable, with weights being their respective probabilities.

Probability

A measure quantifying the likelihood of a specific event occurring, often expressed as a number between 0 and 1.