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© 2014 Pearson Canada Inc.#12.2 Pension Funds
A defined-benefit plan ____.
A) has borrowed from the public
B) has purchased foreign currency
C) sets future income payments in advance
D) has agreed to make periodic payments for a specific period of time
Answer: C
Diff: 1 Type: MC Page Ref: 278
Skill: Recall
Objective List: 12.2 Understand the key aspects of pension funds
____ are financial intermediaries that provide the public with a kind of protection:
income payments
on retirement.
A) Pension funds
B) Investment banks
C) Finance companies
D) Credit unions
Answer: A
Diff: 1 Type: MC Page Ref: 278
Skill: Recall
Objective List: 12.2 Understand the key aspects of pension funds
Which of the following is an example of a fully funded plan?
A) Contributions are sufficient to payout the benefits but earnings are not.
B) Contributions and earnings are not sufficient to payout the benefits.
C) Contributions and earnings are sufficient to payout the benefits.
D) Earnings are sufficient to payout the benefits but contributions are not.
Answer: C
Diff: 2 Type: MC Page Ref: 278
Skill: Recall
Objective List: 12.2 Understand the key aspects of pension funds
Which of the following is an example of an underfunded plan?
A) Contributions are sufficient to payout the benefits but earnings are not.
B) Contributions and earnings are not sufficient to payout the benefits.
C) Contributions and earnings are sufficient to payout the benefits.
D) Earnings are sufficient to payout the benefits but contributions are not.
Answer: B
Diff: 2 Type: MC Page Ref: 278
Skill: Recall
Objective List: 12.2 Understand the key aspects of pension funds