Air France-KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF's financial statements and disclosure notes for the year ended December 31, 2015, are available in Connect. This material is also available under the Finance link at the company's website (www.airfranceklm.com.) The presentation of financial statements often differs between U.S. GAAP and IFRS, particularly with respect to the balance sheet.

Using IFRS, companies discount their pension obligations using an interest rate approximating the average interest rate on high quality corporate bonds. U.S. GAAP allows much more flexibility in the choice of a discount rate. By both sets of standards, the rate used is reported in the disclosure note related to pensions.

Required:

Refer to AF's Note 31.2 "Description of the actuarial assumptions and related sensitivities."

1. What are the average discount rates used to measure AF's (a) 10-15 year and (b) 15 year and more pension obligations in the "euro" geographic zone in 2015?

2. If the rate used had been 1% (100 basis points) higher, what change would have occurred in the pension obligation in 2015? What if the rate had been 1% lower?