If We Are Risk-Averse, a Risky Investment with an 8

question 13

True/False

If we are risk-averse, a risky investment with an 8% return will be preferred over an 8% risk-free investment.

---

Definitions:

Plan Assets

Investments and other assets set aside by an employer to fund pension benefits or other retirement plans for its employees.

Projected Benefit Obligation

An actuarial estimate of the total value of future pension benefits owed to employees, based on their service and salary history, to be paid by a pension plan.

Pension Plan Assets

The resources set aside by a company to meet future pension obligations to retirees, usually in the form of investments.

Actuarial Assumptions

Hypothetical conditions used for projecting financial or insurance outcomes, involving demographic, economic, and other factors.