Many Defined Benefit Pension Plans Have a Target Rate of Return

question 33

Multiple Choice

Many defined benefit pension plans have a target rate of return on investment ____________.

• A) equal to the firm's return on equity
• B) equal to the plan's assumed actuarial rate of return
• C) equal to the economic inflation rate because wages often increase with inflation
• D) equal to the estimated stock market return

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Definitions:

Direct Method

A way to prepare a cash flow statement where actual cash flows from operating activities are listed directly.

Custodial Services

Services related to the cleaning and maintenance of buildings and facilities.

Square Feet

A unit of area measurement equivalent to a square that measures one foot on each side.

Direct Method

A way of preparing a cash flow statement where actual cash flow information from the company’s operations is used, directly showing cash receipts and cash disbursements.