Which of the following statements is incorrect?
A) Commercial paper is commonly purchased by money market funds.
B) From an investor's perspective, money market funds usually have a low level of credit risk.
C) Money market funds tend to have low interest rate risk compared to bond funds.
D) If mutual fund managers expect interest rates to decrease in the future, they should use funds generated from maturing securities today to purchase new securities with shorter maturities.

Question

Quizplus · Accepted Answer

If mutual fund managers expect interest rates to decrease, they should purchase securities with longer maturities to lock in higher rates before they fall, not shorter maturities.

Which of the Following Statements Is Incorrect