Question #21
Reading: Reading 9 Employee Compensation - Post-Employment and Share-Based
PDF File: Reading 9 Employee Compensation - Post-Employment and Share-Based.pdf
Page: 7
Status: Incorrect
Correct Answer: B
Your Answer: B
Question
In order to decrease the projected benefit obligation (PBO) of a pension plan, which of the following changes in pension assumptions can be made to yield the desired result?
Answer Choices:
A. Increase the expected rate of return
B. Decrease the discount rate
C. Decrease the rate of compensation growth
Explanation
A decrease in the rate of compensation growth will lower future pension payments and in
turn, lower the PBO.