Came across this on a FinQuiz mock. What do you guys think?
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My answer: risk tolerance is average, as 1) high liquidity constraint resulting from putting aside $10MM per annum ($10 out of $35MM portfolio is a significant amount); 2) $5MM of the portfolio is in the form of stock in that music record company, with the CEO forbidding the fund to diversify away from it. These factors are offset by a) long-time horizon as there is no spend-down requirement, and b) carry-back and carr-yforward allowances.
Their answer: In the absence of any requirements to spend down the fund’s budget over a predefined period of time, the foundation has an indefinite time horizon. Therefore, the MF has an above average ability to tolerate risk.