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In class notes we argued that it makes no sense to discount guaranteed (i.e., default-free) future pension obligations by the expected return on the asset

In class notes we argued that it makes no sense to discount guaranteed (i.e., default-free) future pension obligations by the expected return on the asset portfolio under management. However, we argued that one can meaningfully combine: the present value of assets under management the expected return on these assets the expected return volatility on these assets How can the combination of these three elements be used and compared to the future value of the pension's obligations

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