If money market fund managers expect interest rates to increase, they will ____ their average asset maturity.
A)not adjust
B)shorten
C)lengthen
D)shorten (if the expected change is small)or lengthen (if the expected change is large)

Question

Quizplus · Accepted Answer

When money market fund managers expect interest rates to increase, they typically shorten their average asset maturity to reduce interest rate risk and to be in a position to reinvest at higher rates as they materialize.

If Money Market Fund Managers Expect Interest Rates to Increase