Financial Risk Manager Part 2
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The board of directors at a manufacturing company is currently reviewing the defined benefit pension plan for its employees. In this context, which of the following statements accurately describes the funding risk inherent in the defined benefit pension plan being examined?
A
Decreases in interest rates always reduce funding risk.
B
Funding risk represents the true long-term risk to the plan sponsor.
C
Funding risk is effectively transferred to the employees of the manufacturing company.
D
As the time horizon for expected payouts gets longer, the plan's funding risk decreases.