You have been named as investment adviser to a foundation established by Dr. Walter Jones with an original contribution consisting entirely of the common stock of Jomedco, Inc. Founded by Dr. Jones, Jomedco manufactures and markets medical devices invented by the doctor and collects royalties on other patented innovations.

All of the shares that made up the initial contribution to the foundation were sold at a public offering of Jomedco common stock, and the $5 million proceeds will be delivered to the foundation within the next week. At the same time, Mrs. Jones will receive $5 million in proceeds from the sale of her stock in Jomedco.

Dr. Jones's purpose in establishing the Jones Foundation was to "offset the effect of inflation on medical school tuition for the maximum number of worthy students."

You are preparing for a meeting with the foundation trustees to discuss investment policy and asset allocation.

a. Define and give examples that show the differences between an investment objective, an investment constraint, and investment policy.

b. Identify and describe an appropriate set of investment objectives and investment constraints for the Jones Foundation.

c. Based on the investment objectives and investment constraints identified in part (b), prepare a comprehensive investment policy statement for the Jones Foundation to be recommended for adoption by the trustees.