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Basic Question 12 of 17
A higher rate of compensation increase ______ service cost and ______ interest cost.
B. increases, decreases.
C. increases, increases.
A. decreases, increases.
B. increases, decreases.
C. increases, increases.
User Contributed Comments 2
| User | Comment |
|---|---|
| rodney176 | How does compensation affect the discount rate ? |
| merc5559 | It doesn't. Interest cost= PBO x Discount Rate. Higher rate of compensation leads to higher PBO which leads to higher interest cost. |
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Learning Outcome Statements
explain and calculate how adjusting for items of pension and other post-employment benefits that are reported in the notes to the financial statements affects financial statements and ratios;
interpret pension plan note disclosures including cash flow related information;
CFA® 2025 Level II Curriculum, Volume 2, Module 11.