From an Employee's Point of View,what Advantage Do Defined Contribution

question 3

Multiple Choice

From an employee's point of view,what advantage do defined contribution plans have over defined benefit plans?

• A) The employer assumes the risk of investments.
• B) They tend to be more portable.
• C) They provide a higher pension for those who join the company later in life.
• D) Risk is averaged over a large group of employees.

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Definitions:

ROE

Return on equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company is using assets to generate profits.

Liquidation Value

The estimated total value of a company's physical assets if it were to go out of business and the assets sold off.

Replacement Cost

The amount of money required to replace an asset at the current market value.

Tobin's Q

A ratio comparing the market value of a company's assets to their replacement cost, used to evaluate whether a company is over or undervalued.