QUESTION 67

1. Manor Endowment (ME) funds medical research. ME has an average spending rate of 5.3% over the past three years, while inflation has averaged 1.6%. The endowments portfolio generated a 19% return last year. For the upcoming year, MEs return objective is closest to:

   		a. 5.3%.
   		b. 6.9%.
   		c. 12.7%.
   		d. 19.0%.

QUESTION 68

1. A defined benefit plan has 300 employees with a majority of them under age 40. The pension fund manager has collected the following data: Risk Free rate = 2.3%, Discount rate used to compute pension obligations= 7.1%, Expected inflation rate = 1.7%, and Yield to maturity on the company 30-year bonds=6.2%. The return objective for the pension fund is closest to:

   		a. 6.2%.
   		b. 7.1%.
   		c. 8.8%.
   		d. 9.6%.