At the beginning of 1995, General Motor's pension funds were under- funded (i.e., the value of their liabilities exceeded the value of their assets) by $9.3 billion. Even though the company injected $10.4 billion during the year, at the end of 1995 the pension funds were still underfunded. Knowing that interest rates dropped during 1995, explain what must have happened.

At the beginning of 1995, General Motor's pension funds were under- funded (i.e., the value of their liabilities exceeded the value of their assets) by $9.3 billion. Even though the company injected $10.4 billion during the year, at the end of 1995 the pension funds were still underfunded. Knowing that interest rates dropped during 1995, explain what must have happened.

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter8: Subprime Lending Fiasco-ethics Issues

Section: Chapter Questions

Problem 6.3EC

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