Income Beginner: Introduction to Money Market Funds

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1.
Why would investors "park" money in a money market fund?
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They are waiting to take advantage of a more lucrative opportunity. Many investors keep money in money market funds during market downturns and then take it out when the market improves.
2.
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.
3.
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.
4.
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.
5.
One way to get both money market rates and FDIC or NCUSIF protection is to invest in a _______.
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Money market deposit account. If you can keep the high minimum deposit, you can get both of these features in this special type of account.