Financial Risk Manager Part 2
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Q-42. A company's pension fund is established as a defined benefit plan, and therefore the board must consider funding risk. Which of the following statements about the pension fund's funding risk is correct?
A
The longer the horizon for expected payouts, the lower the funding risk.
B
Decreases in interest rates will reduce funding risk.
C
The funding risk has been effectively transferred to the employees.
D
Funding risk represents the true long-term risk to the plan sponsor.