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Answer: The sponsor of a defined benefit plan defines the retirement benefits owed to participants.
**Explanation:** - **Option A** is incorrect because defined benefit plans (DB plans) often have a high risk tolerance, especially when the plan is mature and can absorb market fluctuations. - **Option B** is incorrect because defined contribution plans (DC plans) are tailored to individual investors, whose risk tolerance depends on personal factors like investment goals, financial circumstances, and time horizon. For example, younger investors may prefer growth-oriented assets, while retirees might focus on income-generating investments. - **Option C** is correct because in a defined benefit plan, the sponsor is obligated to specify the retirement benefits promised to participants, making the future benefit predefined. This is a key characteristic of DB plans.
Author: LeetQuiz Editorial Team
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Which of the following statements regarding pension plans is most accurate?
A
Defined benefit plans generally exhibit a high risk tolerance.
B
Defined contribution plans' risk tolerance varies by individual investor.
C
The sponsor of a defined benefit plan defines the retirement benefits owed to participants.
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