The -------------- Provides Investors with a Method of Calculating a Required

question 12

Multiple Choice

The -------------- provides investors with a method of calculating a required return for a stock.

• A)dividend discount model
• B)risk-free rate
• C)Fisher model
• D)Capital Asset Pricing Model

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Definitions:

Unrecognized Prior Service Cost

Costs associated with retroactive benefits granted in pension plans, which are not immediately recognized as an expense but are amortized over time.

Years-Of-Future-Service Method

An actuarial technique used to calculate pension benefits, taking into account the expected years of service remaining for an employee.

Defined Benefit Pension Plan

A retirement plan where employee benefits are calculated using a formula that considers several factors, such as length of employment and salary history, with the employer bearing the investment risk.

Projected Benefit Obligation

An actuarial estimation of the present value of all the benefits earned by employees, taking into account expected future salary increases.