Which of the Following Is a True Statement Regarding Actuarial

question 32

Multiple Choice

Which of the following is a true statement regarding actuarial funding?

• A)Actuarial funding applies to both defined benefit and defined contribution plans.
• B)Given the same set of plan conditions and actuarial assumptions, each different actuarial funding model derives the same funding pattern over time.
• C)Given the same set of plan conditions and actuarial assumptions, each different actuarial funding model builds up a pension fund to the same future balance.
• D)Actuarial funding is synonymous with terminal funding.

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Definitions:

Miller-Orr Model

A financial model used to manage cash flow and determine the optimal level of cash reserves for a firm.

Trading Costs

Expenses associated with buying and selling securities, including commissions, spreads, and slippage.

Collection Float

The time period between when a payment is initiated by a debtor and when the funds are actually available to the creditor.

Transaction Motive

Refers to the need to hold cash for the purpose of conducting daily business transactions and operations.