This question comes from Schwester Bank.
Which of the following is the most appropriate return objective for a private foundation that has been established to provide support in perpetuity?
A)
5.3% of assets plus expected inflation.
B)
The long-term treasury bond return plus inflation.
C)
The market return plus expected inflation.
The correct answer is A, though I’m not clear why. To me none of them look right.
In the absnece of where the foundation was created, it’s not clear what spending rules apply. My recall from the curriculum is that the 5% spending rule is something that is done in the US. Do we generally assume that we always have a 5% spending rule if the question doesn’t say otherwise?
Which of the following is the most appropriate return objective for a private foundation that has been established to provide support in perpetuity?
A)
5.3% of assets plus expected inflation.
B)
The long-term treasury bond return plus inflation.
C)
The market return plus expected inflation.
The correct answer is A, though I’m not clear why. To me none of them look right.
In the absnece of where the foundation was created, it’s not clear what spending rules apply. My recall from the curriculum is that the 5% spending rule is something that is done in the US. Do we generally assume that we always have a 5% spending rule if the question doesn’t say otherwise?