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Chapter 11.

Effective Date: 09/01/2010

Finance and Document Execution Authority

11.1 General Investment Policy
  1. Protection of principal amounts.

In considering the investment of cash in securities, protection of the principal amount must be the foremost consideration. It is therefore paramount that the purchase of speculative type securities, such as common and/or preferred stocks in particular, be prohibited except as permitted by the Board of Control Sale of Stock policy, and subject to Sections 18 and 19 of Article IX of the Constitution of the State of Michigan.

The following investments are authorized:

Negotiable certificates of deposit, savings accounts, collateralized certificates of deposit at a banking institution authorized by Policy 12.3 and other interest bearing accounts of (1) a bank which is a member of the Federal Deposit Insurance Corporation, (2) a savings and loan association which is a member of the Federal Savings and Loan Insurance Corporation, or (3) a credit union which is insured by the National Credit Union Administration, within the limitations imposed by Article IX, Section 20 of the Constitution of the State of Michigan.

Purchase of U.S. Treasury obligations, Federal agency securities, and money market certificates may be made in any amounts.

Deposits in cash management accounts may be made in any amount.

Commercial paper rated within the two highest classifications of prime as established by at least one of the standard rating services are authorized. The total investment in commercial paper of any one corporation shall be limited to an amount of $1,000,000 or 20% of the equity of the stockholders of the corporation, whichever is greater.

Bankers acceptances and irrevocable letters of credit drawn on a bank which is member of the Federal Deposit Insurance Corporation.

Repurchase agreements against eligible collateral, the market value of which must be maintained during the life of the agreements at levels equal to or greater than the amounts advanced for such agreements. For purposes of this section, eligible collateral shall mean all securities which would otherwise be qualified for outright purchase under this policy.

Eurodollar time deposits or certificates of deposit in Tier 1, 2, or 3 United States banks or their branches in Montreal, Toronto, Nassau, or London or Tier 1, 2, or 3 Canadian banks in Montreal or Toronto.

  1. Optimum yield shall be our secondary objective, consistent with maximum safety.
  2. Purchases and selling of any investments, other than stocks, shall be the responsibility of the Treasurer or a designee appointed by the Treasurer, consistent with the objectives outlined in paragraphs 1 and 2, above.
  3. Purchases of investments (other than certificates of deposit) may be transacted through any banking, financial, or investment institution.
History
06/09/76 Commercial Paper
12/05/75
01/28/80 Broadened authorized investments
01/28/82
03/19/82 Eurodollar
01/17/86
09/24/93 Added exceptions for University Endowment Fund and Employee Retirement Health Care Plan
07/15/2010 Was previously Policy 13.1. Renumbered and added collateralized certificates of deposit as permitted investments.
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