SIE practice questioneasyMutual Funds — Types
A money market mutual fund invests primarily in:
- ALong-term corporate bonds and equities
- BShort-term, high-quality debt instruments such as T-bills and commercial paper✓ Correct answer
- CForeign currencies and precious metals
- DReal estate properties and REITs
Explanation
Why B — Short-term, high-quality debt instruments such as T-bills and commercial paper
Money market mutual funds invest in short-term, high-quality (investment-grade) debt instruments: T-bills, commercial paper, banker's acceptances, repos, and short-term CDs. They seek to maintain a stable $1.00 NAV and provide liquidity and income with minimal risk. They are NOT FDIC-insured but are regulated under SEC Rule 2a-7.
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