invic

Robert Jones, CFA, is the trustee for The Homestead Foundation, a charitable organization whose mission is to provide funding to construct affordable housing in economically disadvantaged neighborhoods across the U.S. In accordance with the new Prudent Investor Rule, a key factor that Jones should consider when making investment decisions for the portfolio is:

A) to eliminate the Foundation’s assets’ exposure to investment risk through appropriate investment decisions.

B) the Foundation’s irregular needs for liquidity when undertaking construction projects.

C) avoiding strategies that interfere with legal list statutes, or fail to preserve the purchasing power of Foundation assets.

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The Foundation, like every beneficiary of a trust, has its own unique liquidity needs. Jones, as trustee, must consider the Foundation’s cash flow requirements when managing trust assets.

invic

When investing and managing trust assets in accordance with the new Prudent Investor Rule, a trust manager should most likely consider which of the following key factors?

A) The trust’s performance relative to the benchmark.

B) The effects of inflation and deflation.

C) The beneficiary’s knowledge of financial concepts.

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A trust manager should consider the effects of anticipated inflation or deflation on the overall performance of the portfolio and make investment decisions accordingly.