The Logic of Pension Valuation: A Response to Robert Novy-Marx

In a recently published article,1 Robert Novy-Marx identifies what he believes are inconsistencies in the valuation methods espoused by the Governmental Accounting Standards Board (GASB). He advocates that current GASB methodologies for determining the discount rate be replaced by what some academic economists call a “fair-value” or “risk-adjusted” rate of return.

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