Question: You are an actuarial for a defined benefit plan. In a given year, interest rates fall by 4 2 5 basis points ( 4 .

You are an actuarial for a defined benefit plan. In a given year, interest rates fall by 425 basis
points (4.25%) and equity prices are flat. From an actuarial perspective, discuss the effect of this
scenario on a defined benefit pension plan that is 60% invested in equities and 40% invested in
bonds.

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