Solved Questions

Category: Finance
Solutions to Pension Underfunding As a consultant to a state's underfunded pension fund, you have been asked to search for solutions to prevent underfunding in the future. a. One explanation for the underfunding of the defined-benefit plan is that the economy was weak recently, so financial markets ...
Editor July 21, 2021 11:04
part c Explanation In defined-contribution plans, the contributions are determined by the employees themselves. These contributions can be made both by the employer and the employees. Since defined-contribution plans are (View full solution)
Category: Finance
Interpret the following statements made by Wall Street analysts and portfolio managers. a. "The city is now broke because of its pensions." Interpret the following statements made by Wall Street analysts and portfolio managers. b. "Defined-contribution plans would prevent politicians from buying vot...
Editor July 21, 2021 10:52
part c Explanation Pension funds exert a great degree of governance over corporations merely due to their large purchases of stocks and bonds. They take an active role in keeping (View full solution)
Category: Finance
Aligning Incentives of Pension Funds Consider a state pension fund that needs to generate a series of fixed payments for its retirees. Assume that the compensation of the fund's portfolio managers is tied to the return earned on the investments each year. Write a short essay that explains how the co...
Editor July 21, 2021 10:49
Explanation Evaluate the impact of actions of the pension fund managers on their compensation package in great detail. A distinction needs to be made between actions fuelled by personal objectives (View full solution)
Category: Finance
Potential Corruption of Pension Fund Trustees Explain the potential for corruption when a trustee has the power to determine who will manage a pension fund.
Editor July 21, 2021 10:46
Verified Answer A trustee of the pension fund acts as an agent on the behalf of its participants. It is his/her duty to serve the best interests of the employees (View full solution)
Category: Finance
Potential Impact of an Underfunded Public Pension Fund on Debt Explain how an underfunded public pension fund can affect the debt rating of a city or state.
Editor July 21, 2021 10:44
Verified Answer Budget deficits caused by underfunding of the pension plans are often corrected by issuing debt. A large degree of underfunding has led to a default on the behalf (View full solution)