Investments Mini-Quiz: Money Market Funds

  1. Which of the following statements concerning money market mutual funds is (are) correct?
    1. Return on investment is reflected in additional shares and not in increased net asset value.
    2. They typically have no purchase or redemption fees.
    3. Interest rate risk is relatively high because of low liquidity.

      1. I only
      2. II only
      3. I and II only
      4. I, II, and III

  2. All the following money market instruments are likely to be acquired by a conservative money market fund EXCEPT:
    1. Eurodollars
    2. Certificates of deposit
    3. Repurchase agreements
    4. Federal agency securities

  3. Which of the following describes a difference between money market funds and stock mutual funds?
    1. Stock funds provide professional management; money market funds do not.
    2. Money market fund returns are in the form of an increased number of shares; stock fund returns are in the form of increased NAV.
    3. Money market funds provide liquidity to investors; stock funds to not.
    4. Stock funds require a small minimum investment; money market funds usually have no minimum amount requirement.


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