Which of the Following Statements About Pension Plans If Any

question 4

Multiple Choice

Which of the following statements about pension plans if any, is incorrect?

• A) Under a defined benefit plan, the employer agrees to give retirees a specifically defined benefit, such as $500 per month or 50 percent of the employee's final salary.
• B) A portable pension plan is one that an employee can carry from one employer to another.
• C) An employer's obligation is satisfied under a defined contribution plan when it makes the required contributions to the plan.The risk of inadequate investment returns is borne by the employee.
• D) If assets exceed the present value of benefits, the pension plan is fully funded.
• E) A defined contribution plan is, in effect, a savings plan that is funded by employers, although many plans also permit additional contributions by employees.

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Definitions:

Opportunity Costs

The cost of choosing one alternative over others, representing the benefits an individual, investor, or business misses out on when choosing one option over another.

Resource Shiftability

The flexibility with which resources can be shifted from producing one product to another in response to changing market demands.

Production Possibilities Curve

A graphical representation showing the maximum combination of goods or services that can be produced in a given time period with available resources.

Consumer Goods

Products and commodities bought and used by individuals and households for personal consumption.