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Basic Question 0 of 15
On December 31, 2010, the expected postretirement benefit obligation was $300 million. The accumulated postretirement benefit obligation was $175 million. Service cost for 2011 was $60 million. The actuary's discount rate is 8%. What was the interest cost for 2011?
B. $18.8 million.
C. $24.0 million.
A. $14.0 million.
B. $18.8 million.
C. $24.0 million.
User Contributed Comments 6
| User | Comment |
|---|---|
| george2006 | The interest cost for pension plan is based on begining balance of the PBO, not ABO. Is this correct that other post-retirement benefit plan interest cost is based on ABO, not expected BO? |
| ssradja | i thought the interest cost = PBO * discount rate. here the formula is ABO * discount rate. anybody? |
| creativemny | This question is about the Post-retirement Benefit Obligation which is different then Pension Obligation. APBO is the only measure (there is no PPBO) because companies rarely fund these. |
| ngeorge | yes, this question is for a post-retirement medical plan--not a pension plan. |
| vi2009 | good one! |
| quanttrader | interest cost (post retirement benefit obligation) = apbo * r |
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Learning Outcome Statements
demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity
recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct
identify conduct that conforms to the Code and Standards and conduct that violates the Code and Standards
CFA® 2026 Level I Curriculum, Volume 6, Module 3.