What type of investments do money market mutual funds typically include?

What type of investments do money market mutual funds typically include?

• A. Only U.S. Treasury bonds
• B. Long-term corporate stocks
• C. U.S. Treasury bills, federal agency issues, and certificates of deposit
• D. Only high-risk equities

Answer: (C)

Money market mutual funds are designed to offer investors a safe place to invest easily accessible, cash-equivalent assets. These funds typically invest in short-term, high-quality debt instruments, which include U.S. Treasury bills, federal agency issues, and certificates of deposit. U.S. Treasury bills are considered one of the safest investments as they are backed by the full faith and credit of the U.S. government. Federal agency issues are also relatively safe, as they are issued by government-sponsored enterprises. Certificates of deposit are time deposits offered by banks with a fixed interest rate and maturity date, providing stability and liquidity. By investing in these types of securities, money market mutual funds are able to maintain a stable net asset value (NAV) and provide liquidity for investors who may need quick access to their funds. This characteristic makes them popular among conservative investors looking for a low-risk option for short-term cash management.

Money market mutual funds are designed to offer investors a safe place to invest easily accessible, cash-equivalent assets. These funds typically invest in short-term, high-quality debt instruments, which include U.S. Treasury bills, federal agency issues, and certificates of deposit.

U.S. Treasury bills are considered one of the safest investments as they are backed by the full faith and credit of the U.S. government. Federal agency issues are also relatively safe, as they are issued by government-sponsored enterprises. Certificates of deposit are time deposits offered by banks with a fixed interest rate and maturity date, providing stability and liquidity.

By investing in these types of securities, money market mutual funds are able to maintain a stable net asset value (NAV) and provide liquidity for investors who may need quick access to their funds. This characteristic makes them popular among conservative investors looking for a low-risk option for short-term cash management.