valuation impact with pension's equity exposure

seems to me that the impact is always negative regardless increase or decrease of pension’s equity exposure. increase => increase in company’s overall risk profile => lower P/E decrease => decrease in surplus and higher contribution => lower earnings => lower P/E am i wrong somewhere?

You’ve stumbled upon a huge contradiction. But the explanation is too complex for this exam. Remember 1 for Reading 22 questions. Remember 2 for IPS questions. Forget you ever tried to reconcile the two.