Because money market funds contain instruments with short-term maturities, their market values are not very sensitive to movements in market interest rates.

Question

Quizplus · Accepted Answer

Money market funds invest in short-term debt securities, which means they have shorter maturities. As a result, their market values are less sensitive to interest rate changes compared to longer-term securities, because the shorter duration reduces the impact of interest rate fluctuations on their value.

Because Money Market Funds Contain Instruments with Short-Term Maturities, Their