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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.
The Federal Deposit Insurance Corporation and the National Credit Union Share Insurance Fund do not insure money market mutual funds.
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True. Some investors consider this a disadvantage.
3.
Money market mutual funds usually invest in long-term government bonds and CDs.
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False. Money market funds hold short-term debts of both government units and corporations.
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.
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.