When assessing pension risk, analysts compute ratios for both long- and short-term risk. Which statement below...
When assessing pension risk, analysts compute ratios for both long- and short-term risk. Which statement below is not correct?
Multiple Choice
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Pension assets are deducted from the PBO in only the long term calculation.
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Pension assets are deducted from the PBO in only the short term calculation.
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The computed ratios are generally compared to a median (e.g. Compustat data).
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For both long and short term the denominator is the market value of common stock.
Homework Answers
Answer: Pension assets are deducted from the PBO in only the long term calculation.
Explanation: For short term calculation, Pension assets are deducted from the Projected Benefit Obligation (PBO) & not for long term calculation..
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