Income Beginner: Introduction to Money Market Funds

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1.
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.
2.
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.
3.
You are allowed to write checks from a money market mutual fund.
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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.
4.
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.
5.
Due to the stability of the underlying instruments, money market fund shares are guaranteed to remain at $1.00.
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False. They cannot guarantee this, although money market funds usually keep their net asset values at $1 per share.