When it comes to pensions, a guess about a fraction of a percentage point can be worth billions of dollars to big corporations.
On Jan. 22, 2014, telecom giant AT&T posted a $7.6 billion pension-related gain for the fourth quarter. Most of that came from simply changing its assumption about the discount rate on its retirement plan to 5 percent from 4.3 percent.
But just a year earlier, it posted a massive pension loss after lowering its assumption.
So what changed?
While extremely complicated, the simple version of the discount rate in this case is this: the rate companies use to calculate the present value of their future retiree obligations.
In other words, how much you need today to pay your retirees' pensions tomorrow.