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Notices
Bridge over ocean
1 September 2014 Financial Analysts Journal Volume 70, Issue 5

Question: How Does Investment Return Affect Pension Cost?

Lawrence N. Bader

The author asserts that pension fund risk management rests on understanding that the enemy is not asset risk per se but, rather, asset–liability mismatch. He argues that to minimize pension risk, companies should invest their pension funds solely in high-quality fixed-income securities that match the projected cash flows or durations of the accrued pensions.

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