Income Beginner: Introduction to Money Market Funds

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1.
Money market funds that invest in short-term Treasury bills have yields that are ________ than non-Treasury money market funds.
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Lower. US Treasury money market funds generally have lower yields than other money market funds.
2.
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.
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.
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.
5.
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.