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NEW QUESTION: 1
Lauren Jacobs, CFA, is an equity analyst for DF Investments. She is evaluating Iron Parts Inc. Iron Parts is a manufacturer of interior systems and components for automobiles. The company is the world's second largest original equipment auto parts supplier, with a market capitalization of $1.8 billion. Based on Iron Parts's low price-to-book value ratio of 0.9* and low price-to-sales ratio of 0.15x, Jacobs believes the stock could be an interesting investment. However, she wants to review the disclosures found in the company's financial footnotes. In particular, Jacobs is concerned about Iron Parts's defined benefit pension plan. The following information for 2007 and 2008 is provided.
Iron Parts has adopted SFAS No. 158, Employers' Accounting for Defined Benefit Pensions and Other Postretirement Plans.
Jacobs wants to fully understand the impact of changing pension assumptions on Iron Parts's balance sheet and income statement. In addition, she would like to compute Iron Parts's economic pension expense.
Which of the following best describes ihe effects of the change in Iron Parts's discount rate for 2008, all else equal?
A. Pension expense decreased and the PBO increased.
B. Service cost decreased and the pension plan appeared more funded.
C. Interest cost increased and retained earnings decreased.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
The discount rate increased from 3-5% to 6.0%. An increase in the discount rate will result in lower service cost. Lower service cost will result in a lower PBO. A lower PBO will result in a higher funded status (more funded). Lower service cost will result in lower pension expense and higher retained earnings. The impact on interest cost cannot be determined without more information. (Study Session 6, LOS 22.c)
NEW QUESTION: 2
Which position below is NOT a component of common equity Tier 1 capital?
A. common shares issued by bank
B. stock surplus (share premium)
C. retained earnings
D. innovative hybrid capital instruments with incentives to redeem
Answer: D
NEW QUESTION: 3
What is the most fundamental language for writing a Web page?
A. SOAP Document
B. Adobe Flash
C. Cascading style sheet
D. Java Script
E. HyperText Markup Language
Answer: E
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