Income Beginner: Introduction to Money Market Funds

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You are allowed to write checks from a money market mutual fund.

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True

False

True. This is one of the many popular features offered by these funds, but you must write your checks for at least a certain amount, such as $250.

Money market mutual funds invest in _______.

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Short-term debts

Long-term debts

The stock market

The currencies of foreign nations

Short-term debts. The money market is the market for the short-term debts of corporations and government units.

One of the major risks of money market mutual funds is _______ risk.

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Currency

Tax

Inflation

Inflation. Because the returns of money market funds are relatively low, inflation can chip away at their purchasing power.

All of the following are privileges of owning a money market fund except that ______.

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You may be able to withdraw funds from ATMs

You may write checks

You may use it for a business account

All of the above may be privileges of a money market fund.

All of the above may be privileges of a money market fund. Money market funds have many privileges, which make them attractive and versatile.

Money market funds that invest in short-term municipal securities are tax-exempt.

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True

False

True. Tax-exempt money market funds invest in short-term municipal securities.

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