Jarvis University (JU) is a private, multiprogram U.S. university with a $2 billion endowment fund as of
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In a recent capital campaign, JU only met its fund-raising goal with the help of one very successful alumna, Valerie Bremner, who donated $400 million of Bertocchi Oil and Gas common stock at fiscal year-end May 31, 2009. Bertocchi Oil and Gas is a large-capitalization, publicly traded U.S. company. Bremner donated the stock on the condition that no more than 25% of the initial number of shares may be sold in any fiscal year. No substantial additional donations are expected in the future.
Given the large contribution to and distributions from the endowment fund, the endowment funds investment committee has decided to revise the funds investment policy statement. The investment committee also recognizes that a revised asset allocation may be warranted. The asset allocation in place for the JU endowment fund as of May 31, 2009, is given in Table E.
a. Prepare the components of an appropriate investment policy statement for the Jarvis University endowment fund as of June 1, 2009, based only on the information given.
Each component in your response must specifically address circumstances of the JU endowment fund.
b. Determine the most appropriate revised allocation percentage for each asset in Table E as of June 1, 2009. Justify each revised allocationpercentage.
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