Question: A defined benefit plan has 100 employees with a majority of them over age 40. The pension fund manager has collected the following data: Risk-free

A defined benefit plan has 100 employees with a majority of them over age 40. The pension fund manager has collected the following data:

Risk-free rate 2.50%

S&P 500 return (5-year average) 9.87%

Expected inflation rate 2.10%

Discount rate used to compute pension obligation 5.95%

Yield to maturity on the company 20-year bonds 6.28%

The return objective for the pension fund is closest to:

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