18-46 Because MMDAs are in direct competition with MMMFs,the withdrawal rate is affected by the relative amount of explicit interest paid on these accounts.

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Quizplus · Accepted Answer

The statement is true. MMDAs (Money Market Deposit Accounts) and MMMFs (Money Market Mutual Funds) are both types of investment accounts that offer similar benefits, such as low risk and easy access to funds. However, MMDAs are typically offered by banks and credit unions, while MMMFs are offered by investment companies. One factor that can affect the withdrawal rate (i.e. how often investors withdraw funds from the account) is the interest rate offered on the account. Since MMDAs and MMMFs are in direct competition with each other, the relative amount of explicit interest paid on these accounts can influence investors' decisions to withdraw funds from one account or the other. Thus, the statement is true.

18-46 Because MMDAs Are in Direct Competition with MMMFs,the Withdrawal