a. A treasurer of a municipality with a municipal pension fund has required that its in-house portfolio

Question:

a. A treasurer of a municipality with a municipal pension fund has required that its in-house portfolio manager invest all funds in the highest investment grade securities that mature in 1 month or less. The treasurer believes that this is a safe policy. Comment on this investment policy.

b. The same treasurer requires that the in-house portfolio municipality's operating fund (i.e., fund needed for day-to-day operations of the municipality) follow the same investment policy. Comment on the appropriateness of this investment policy for managing the municipality's operating fund.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...