QUESTION 68

A defined benefit plan has 300 employees with a majority of them under age 40. The pension fund manager has collected the following data: Risk Free rate = 2.3%, Discount rate used to compute pension obligations= 7.1%, Expected inflation rate = 1.7%, and Yield to maturity on the company 30-year bonds=6.2%. The return objective for the pension fund is closest to:

a. 6.2%.

b. 7.1%.

c. 8.8%.

d. 9.6%.