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Suppose a defined-benefit pension plan offers a retirement benefit tied to years of service and final salary and that the retirement benefit is increased by
Suppose a defined-benefit pension plan offers a retirement benefit tied to years of service and final salary and that the retirement benefit is increased by a fixed 5% per year each year.There is a plan to change the retirement-plan formula so the amount of the retirement benefit increase is positively correlated to how companys stock has performed (rather than the fixed 5% rate).The change in this retirement will cause the discount rate for the DB plan benefit to:
a Increase
b Stay the same
c Decrease
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