There Are a Number of Assumptions About Future Events That

question 50

Multiple Choice

There are a number of assumptions about future events that must be made regarding a defined benefit plan.An assumption that does not need to be made is:

• A)interest rates.
• B)employee turnover.
• C)mortality rates.
• D)compensation.
• E)how long the firm will continue.

---

Definitions:

AAA Corporate Bonds

High-grade corporate bonds rated AAA, indicating the highest level of creditworthiness and lowest risk of default.

Volatility

The rate at which the price of a security increases or decreases for a given set of returns, often measured by the standard deviation of historical daily price changes.

Interest Rates

The cost of borrowing money or the return on investments, usually expressed as a percentage of the principal amount per annum.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date, typically at a predefined call price.