Page 1 of 59
CEBS RPA 2 EXAM 2026–2027: THE
VERIFIED Q&A CERTIFICATION
VAULT COVERING DEFINED BENEFIT
VS. DEFINED CONTRIBUTION PLANS,
HYBRID CASH BALANCE PLANS, AND
THE PENSION PROTECTION ACT (PPA)
WITH THE LATEST UPDATED COURSE
REVISIONS FOR A GUARANTEED A+
PASS
Purchasing power risk >>correct answer >>
Risk of nominal rate of return not keeping up
with inflation
Business risk >>correct answer >> Risk of
decline in earnings affecting ability to pay
interest/dividends
,Page 2 of 59
Interest rate risk >>correct answer >> Inverse
relationship between interest rates and bond
prices
Market risk >>correct answer >> Individual
stock's reaction to market changes
Specific risk >>correct answer >> Risk
intrinsic to a particular firm
Tax aspect of investment >>correct answer
>> Important for pension fund due to tax-
exempt status
Relative liquidity >>correct answer >>
Importance to pension plan's investment
manager
,Page 3 of 59
Risk-and-return characteristics >>correct
answer >> Historical studies show riskiest
investments generate highest yields
Steps in performance measurement >>correct
answer >> Establishment, Input, Processing,
Output
Caveats in choosing performance measurement
system >>correct answer >> Avoid hasty
choice, Fit investment objectives, Measurement
may alter process, Avoid overmeasurement
Internal rate of return >>correct answer >>
Determines if investment achieves assumed rate
of return
, Page 4 of 59
Time-weighted rate of return >>correct
answer >> Computed by dividing time interval
into subintervals
Alpha value >>correct answer >> Amount of
return produced by portfolio independent of
market
Beta value >>correct answer >> Average
return on portfolio per 1% return on market
Risk-adjusted rate of return >>correct answer
>> Used to measure risk-adjusted performance
Money market instruments >>correct answer
>> U.S. Treasury bills, Federal agency issues,
Certificates of deposit, Commercial paper,
Money market mutual funds
CEBS RPA 2 EXAM 2026–2027: THE
VERIFIED Q&A CERTIFICATION
VAULT COVERING DEFINED BENEFIT
VS. DEFINED CONTRIBUTION PLANS,
HYBRID CASH BALANCE PLANS, AND
THE PENSION PROTECTION ACT (PPA)
WITH THE LATEST UPDATED COURSE
REVISIONS FOR A GUARANTEED A+
PASS
Purchasing power risk >>correct answer >>
Risk of nominal rate of return not keeping up
with inflation
Business risk >>correct answer >> Risk of
decline in earnings affecting ability to pay
interest/dividends
,Page 2 of 59
Interest rate risk >>correct answer >> Inverse
relationship between interest rates and bond
prices
Market risk >>correct answer >> Individual
stock's reaction to market changes
Specific risk >>correct answer >> Risk
intrinsic to a particular firm
Tax aspect of investment >>correct answer
>> Important for pension fund due to tax-
exempt status
Relative liquidity >>correct answer >>
Importance to pension plan's investment
manager
,Page 3 of 59
Risk-and-return characteristics >>correct
answer >> Historical studies show riskiest
investments generate highest yields
Steps in performance measurement >>correct
answer >> Establishment, Input, Processing,
Output
Caveats in choosing performance measurement
system >>correct answer >> Avoid hasty
choice, Fit investment objectives, Measurement
may alter process, Avoid overmeasurement
Internal rate of return >>correct answer >>
Determines if investment achieves assumed rate
of return
, Page 4 of 59
Time-weighted rate of return >>correct
answer >> Computed by dividing time interval
into subintervals
Alpha value >>correct answer >> Amount of
return produced by portfolio independent of
market
Beta value >>correct answer >> Average
return on portfolio per 1% return on market
Risk-adjusted rate of return >>correct answer
>> Used to measure risk-adjusted performance
Money market instruments >>correct answer
>> U.S. Treasury bills, Federal agency issues,
Certificates of deposit, Commercial paper,
Money market mutual funds
