funding ratio

问题如下：

One client sponsors a defined benefit pension plan where the present value of the liabilities is $241 million and the market value of plan assets is $205 million. Beade expects interest rates to rise and both the present value of plan liabilities and the market value of plan assets to decrease by $25 million, changing the pension plan’s funding ratio.

Based on Beade’s interest rate expectations, the pension plan’s funding ratio will:

选项：

decrease.

remain unchanged.

increase.

解释：

A is correct.

The original funding ratio is the market value of assets divided by the present value of liabilities. This plan’s ratio is $205 million/$241 million =0.8506. When the assets and liabilities both decrease by $25 million, the funding ratio will decrease to $180 million/$216 million = 0.8333.

考点：funding ratio

解析：funding ratio=market value of assets/ present value of liabilities

原本的funding ratio=$205 million/$241 million =0.8506，

利率增加后，funding ratio= $180 million/$216 million = 0.8333

因此funding ratio减小，选A。