Which of the Following Is a Characteristic of a Defined

question 15

Multiple Choice

Which of the following is a characteristic of a defined contribution plan?

• A)Employee contributions are typically based upon salary levels.
• B)Employers must make contributions for prior service costs to a defined contribution plan.
• C)Pension plan assets draw interest that may be used to reduce annual contributions to the plan.
• D)Employers bear the risk of loss on pension fund assets.

---

Definitions:

Perfectly Elastic

Describes a situation in economics where the quantity demanded or supplied changes infinitely in response to any change in price.

Interest-Rate Cost-Of-Funds

The cost incurred by financial institutions to raise funds that they can then lend to customers, influenced by prevailing interest rates.

Market Interest Rates

The prevailing rate at which borrowers and lenders agree to engage in transactions of debt securities in the financial markets.

Creative Destruction

A concept in economics which suggests that new innovations destroy old industries and methods, leading to new sectors and opportunities for growth.