An important characteristic of money market mutual funds is that
A)their deposits are insured by FSLIC.
B)they differ from other mutual funds in return and their potential for default risk.
C)they have a high degree of interest-rate risk.
D)most are closed-end mutual funds.

Question

Quizplus · Accepted Answer

Money market mutual funds are different from other types of mutual funds primarily in terms of their return and potential for default risk. They invest in short-term, low-risk securities such as certificates of deposit, treasury bills, and commercial paper. As a result, they generally provide lower returns than other mutual funds but are considered safer investments. They are not insured by FSLIC and can be either open-end or closed-end funds. Money market funds also have a low degree of interest-rate risk as they invest in short-term securities with minimal chance of fluctuations in interest rates affecting their returns.

An Important Characteristic of Money Market Mutual Funds Is That