The Key Difference Between Defined Benefit and Defined Contributions Post-Employment

question 21

Multiple Choice

The key difference between defined benefit and defined contributions post-employment plans is that:

• A) the employee bears the risk in a defined benefit plan, whereas the employer bears the risk in a defined contribution plan
• B) the fund bears the risk in a defined benefit plan, whereas the employee bears the risk in a defined contribution plan
• C) the employer bears the risk in a defined benefit plan, whereas the employee bears the risk in a defined contribution plan
• D) the employer bears the risk in a defined benefit plan, whereas the fund bears the risk in a defined contribution plan

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Definitions:

Consumer's Surplus

The disparity between what consumers are prepared and capable of spending for a product or service and the actual amount they end up paying.

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The amount of money required to purchase a set of earplugs, often dependent on brand, quality, and quantity.

Net Change

Net change refers to the difference in the closing price of a stock, bond, commodity, or index on a given day compared to the closing price on the previous trading day.

Utility Function

A mathematical representation of how different bundles of goods are ranked according to their utility or satisfaction provided to the consumer.