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Five day moving averages: Days 1 – 5: (19.63 + 20 + 20.5 + 22 + 21.13) / 5 = 20.65 Days 2 – 6 = 21.13 Days 3 – 7 = 21.50 Days 4 – 8 = 21.90 Days 5 – 9 = 22.13 Days 6 – 10 = 22.68 Days 7 – 11 = 23.18 Days 8 – 12 = 23.45 ←Sell signal (day 12 price < moving average) Days 9 – 13 = 23.38 Days 10 – 14 = 23.15 Days 11 – 15 = 22.50 Days 12 – 16 = 21.65 Days 13 – 17 = 20.95 Days 14 – 18 = 20.28 Days 15 – 19 = 19.38 Days 16 – 20 = 19.05 Days 17 – 21 = 18.93 ←Buy signal (day 21 price > moving average) Days 18 – 22 = 19.28 Days 19 – 23 = 19.93 Days 20 – 24 = 21.05 Days 21 – 25 = 22.05 Days 22 – 26 = 23.18 Days 23 – 27 = 24.13 Days 24 – 28 = 25.13 Days 25 – 29 = 26.00 Days 26 – 30 = 26.80 Days 27 – 31 = 27.45 Days 28 – 32 = 27.80 Days 29 – 33 = 27.90 ←Sell signal (day 33 price < moving average) Days 30 – 34 = 28.20 Days 31 – 35 = 28.45 Days 32 – 36 = 28.65 Days 33 – 37 = 29.05 Days 34 – 38 = 29.25 Days 35 – 39 = 29.00 Days 36 – 40 = …show more content…
Franklin’s gift, is no longer a primary objective, given the increase in the asset base and the Committee’s understanding that investment policy must accommodate long-term as well as short-term goals. The need for a minimum annual payout equal to 5% of assets must be considered, as well as the need to maintain the real value of these assets. A total return objective (roughly equal to the grant rate plus the inflation rate, but not less than the 5% required for maintenance of the foundation’s tax-exempt status) is appropriate. Risk Tolerance: The increase in the foundation’s financial flexibility arising from Mr. Franklin’s gift and the change in the committee’s spending policy have increased the foundation’s ability to assume risk. The organization has a more or less infinite expected life span and, in the context of this long-term horizon, has the ability to accept the consequences of short-term fluctuations in asset values. Moreover, adoption of a clear-cut spending rule will permit cash flows to be planned with some precision, adding stability to annual budgeting and reducing the need for precautionary liquidity. Overall, the foundation’s risk tolerance is above average and oriented to long-term considerations. CONSTRAINTS Liquidity Requirements: Liquidity needs are low, with little likelihood of unforeseen demands requiring either forced asset sales or immense cash. Such needs