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标题: A Pension Question, please discuss [打印本页]

作者: wizofoz    时间: 2013-4-4 03:54     标题: A Pension Question, please discuss

This is a question on schweser note:
All else equal, which of the following statements best describes the impact of an increase in the expected return on plan assets?
A. Increase in plan assets and decrease in pension expense ( my choice)
B. Decrease in PBO and increase in service cost ( obviously not relevent)
C. Increase in net income. (correct answer)
My logic for choosing A is following: Expected return on assets (up) — expense (down)
—- ending plan assets (lower). I do not see error in that.
Note answer: lower expense leads to higher net income. (I do not know where they derived that!)
please discuss.




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