Mrs$.$ Mary Atkins, age $66,$ has been your firm's client for five years, since the death of her husband, Dr$.$ Charles Atkins. Dr$.$ Atkins

had built a successful newspaper business that he sold two years before his death to Merit Enterprises, a publishing and broadcasting

conglomerate, in exchange for Merit common stock. The Atkinses have no children, and their wills provide that upon their deaths

the remaining assets shall be used to create a fund for the benefit of Good Samaritan Hospital, to be called the Atkins Endowment

Fund.

Good Samaritan is a $180-$bed, not$-$for$-$profit hospital with an annual operating budget of $$12\mathrm{.}5$ million. In the past, the hospital's

operating revenues have often been sufficient to meet operating expenses and occasionally even generate a small surplus. In recent

years, however, rising costs and declining occupancy rates have caused Good Samaritan to run a deficit. The operating deficit has

averaged $$300,000$ to $$400,000$ annually over the last several years. Existing endowment assets $($that is$,$ excluding the Atkins's estate$)$

of $$7\mathrm{.}5$ million currently generate approximately $$375,000$ of annual income, up from less than $$200,000$ five years ago. This

increased income has been the result of somewhat higher interest rates, as well as a shift in asset mix toward more bonds. To offset

operating deficits, the Good Samaritan Board of Governors has determined that the endowment's current income should be

increased to approximately $6\%$ of total assets $($up from $5\%$ currently$).$ The hospital has not received any significant additions to its

endowment assets in the past five years.

Identify and describe an appropriate set of investment objectives and constraints for the Atkins Endowment Fund to be created after

Mrs$.$ Atkins's death.

Questions to answer:

This question is about Mrs$.$ Mary Atkins and the Good Samaritan Hospital.

$1)$What is the hospital$$s investment objective here?

$2)$Let$$s change the problem and assume that the annual operating deficit is $$685,000$ per year.

Given your answer to $1),$ and assuming that the operating deficit is $$685,000$ per year, and the fact that the existing endowment assets are $$7\mathrm{.}5$milion, how much must Mrs$.$ Atkins estate be worth $($assume she will donate all of it to the hospital endowment in her will$)?$

$3)$What investment horizon is the hospital and the endowment fund looking at here?

$4)$What do you think its attitude toward risk should be$?$

$5)$Assess its liquidity needs.

$6)$Tax considerations?

$7)$Are there any income considerations?

$8)$Any unique needs or factors to consider investing Mrs$.$ Atkins bequest?