The kind of pension plan which follows a formula to determine retirement benefits is classified as?
Correct answer: A. defined benefit pension plan
- A. defined benefit pension plan
- B. defined contribution pension plan
- C. defined noncontributory pension plan
- D. deferred contribution pension planCompare Pension Plans
Explanation
A defined benefit pension promises a retirement benefit calculated through a formula based on factors such as salary and years of service. In a defined contribution plan, the contribution is fixed but the final benefit is not guaranteed.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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