What is a money market mutual fund quizlet?

What is a money market mutual fund quizlet?

Money market mutual funds. An investment whose objective is to earn interest for shareholders while maintaining a net asset value (NAV) of $1 per share. The portfolio is comprised of short-term (less than one year) securities representing high-quality, liquid debt and monetary instruments.

Is money market a mutual fund?

A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents. Though not quite as safe as cash, money market funds are considered extremely low-risk on the investment spectrum.

What are mutual funds What are some features of mutual funds quizlet?

1) new mutual funds being formed today must offer reinvestment of dividends and capital gains without a sales charge; 2) a fund may offer various withdrawal plans that allow different payment methods at redemption; 3) tax liabilities for an investor are simplified because each year the fund distributs a From 1099 …

Which of the following is a characteristic of money market mutual fund accounts?

Each of the following is a characteristic of money market funds: — Portfolio of short-term debt instruments . –Money market mutual funds invest in a portfolio of short-term debt instruments such as T-bills, commercial paper, and bankers acceptances. –They are offered without a sales load or charge.

How does a money market account differ from a money market fund quizlet?

What is the difference between a money market account and a money market fund? Money market accounts are insured by the FDIC but money market funds held with an investment company are not insured.

Which of the following are types of money market securities quizlet?

Money market securities include Treasury bills, commercial paper, federal funds, repurchase agreements, negotiable certificates of deposit, banker’s acceptances, and Eurodollars. The term money market is actually a misnomer, because liquid securities are traded in these markets rather than money.

Where are money market funds invested?

Government money market funds invest at least 99.5% of their funds in government-backed securities, making them extremely safe investments. Tax-free money market funds are invested primarily in municipal bonds or debt issued by other entities whose interest payments are exempt from federal income taxes.

Where are money market funds traded?

The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.

What are examples of mutual funds?

7 common types of mutual funds

• Money market funds. These funds invest in short-term fixed income securities such as government bonds, treasury bills, bankers’ acceptances, commercial paper and certificates of deposit.
• Fixed income funds.
• Equity funds.
• Balanced funds.
• Index funds.
• Specialty funds.
• Fund-of-funds.

What are three characteristics of mutual funds?

5 Characteristics of Strong Mutual Fund Shares

• Low Fees or Expenses.
• Consistently Good Performance.
• Sticking to a Solid Strategy.
• Trustworthy, With Solid Reputations.
• Plenty of Assets, but Not Too Much Money.
• The Bottom Line.

What do money market funds comprise of?

The money market instruments mainly comprise: (i) call money, (ii) certificates of deposit, (iii) treasury bills, (iv) other short-term government securities transactions, such as, repos, (v) bankers’ acceptances/commercial bills, (vi) commercial paper, and (vii) inter-corporate funds.

What is money market and capital market?

The money market is the trade in short-term debt. The capital market encompasses the trade in both stocks and bonds. These are long-term assets bought by financial institutions, professional brokers, and individual investors.

What is the rate of return on a money market mutual fund?

Over time, common stocks have returned about 8-10% on average, including recessionary periods. By investing in a money market mutual fund, which may often yield just 2% or 3%, the investor may be missing out on an opportunity for a better rate of return.

Why to invest in money market funds?

Why Use Money Market Funds? Risk Management. Investors use money market funds when they want a cash-like investment. Liquidity. Investments in money market funds are typically liquid, meaning you can usually get your money out within a few business days. Convenience. Some institutions allow you to write checks to withdraw your funds from a money market fund. Responsive Rates.

What are some examples of money market funds?

A mutual fund that invests exclusively in short-term, low-risk securities. Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities.

What are the risks of money market?

A final risk you’re taking with money market funds has to do with inflation. Because money market funds are considered to be safer than other investments like stocks, long term average returns on money market funds tends to be less than long term average returns on riskier investments.

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