Income Beginner: Introduction to Money Market Funds

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1.
Money market funds that invest in short-term municipal securities are tax-exempt.
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True. Tax-exempt money market funds invest in short-term municipal securities.
2.
One of the major risks of money market mutual funds is _______ risk.
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Inflation. Because the returns of money market funds are relatively low, inflation can chip away at their purchasing power.
3.
Money market mutual funds invest in _______.
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Short-term debts. The money market is the market for the short-term debts of corporations and government units.
4.
All of the following are privileges of owning a money market fund except that ______.
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All of the above may be privileges of a money market fund. Money market funds have many privileges, which make them attractive and versatile.
5.
Money market mutual funds invest in all of the following except _______.
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Treasury bonds. Money market funds invest only in short-term debts such as Treasury bills; Treasury bonds are long-term obligations.