What is the most important advantage of a money market mutual fund ____________? (2024)

What is the most important advantage of a money market mutual fund ____________?

Stability and Security. A money market fund is one of the least volatile types of investment available. This characteristic can be useful in offsetting the greater volatility of stock and bond investments that you may have in your portfolio.

What is one advantage of a money market mutual fund account _____?

Advantages of money market accounts often include high yields, liquidity and federal insurance for your funds. They may come with the ability to pay bills, write checks and make debit card purchases.

What is the main advantage of mutual funds?

Some of the advantages of mutual funds include advanced portfolio management, dividend reinvestment, risk reduction, convenience, and fair pricing, while disadvantages include high expense ratios and sales charges, management abuses, tax inefficiency, and poor trade execution.

What are the advantages of investing in a money market fund?

Pros of Money Market Funds

While hedge funds and certain stock funds focus on high-risk, high-return investments, money market funds reside on the lower end of the risk spectrum. It's highly unlikely that you'll lose money with a government-backed bond or a CD that's issued by a creditworthy financial institution.

What is the advantage of a mutual fund quizlet?

What is the main advantage of a mutual fund? They give small investors access to professionally managed, diversified portfolios of stocks, bonds, and other securities.

What is a money market mutual fund quizlet?

Money market mutual funds. An investment whose objective is to earn interest for shareholders while maintaining a net asset value (NAV) of $1 per share. The portfolio is comprised of short-term (less than one year) securities representing high-quality, liquid debt and monetary instruments.

What are the three main advantages of mutual funds?

Key Takeaways
  • Mutual funds offer diversification or access to a wider variety of investments than an individual investor could afford to buy.
  • There are economies of scale in investing with a group.
  • Monthly contributions help the investor's assets grow.
  • Funds are more liquid because they tend to be less volatile.

What are the pros and cons of money market mutual funds?

Money market investing can be advantageous if you need a relatively safe place to park cash in the short term or if you're diversifying a growth portfolio. Some disadvantages are low returns, a loss of purchasing power, and the lack of FDIC insurance.

What is one advantage and one disadvantage of a money market mutual fund compared with a savings account?

Money market accounts are savings accounts that often offer higher interest rates than regular savings accounts and often incorporate checking account features, like easy access to cash. Yet they can also have downsides: Many have minimum balance requirements and excessive fees.

Which asset is the least liquid?

Land, real estate, or buildings are considered among the least liquid assets because it could take weeks or months to sell them. Fixed assets often entail a lengthy sale process inclusive of legal documents and reporting requirements.

Where can stocks be resold name all 3 secondary markets in the United States?

Examples of stock markets (or secondary markets) include the NYSE and Nasdaq in the U.S., as well as the London Stock Exchange (LSE), the Hong Kong Stock Exchange, the Bombay Stock Exchange, and the Frankfurt Stock Exchange.

What is one of the major advantages of investing in mutual funds quizlet?

The primary advantage of investing in mutual funds is the ability to sell your shares without risk of loss. Investors in growth funds earn their return through capital gains rather than through dividends.

What are 2 reasons why a money market fund could be beneficial?

Advantages of money market funds
  • Stability Money market mutual funds are considered to be one of the least volatile types of mutual fund investments.
  • Liquidity It's easy to settle your brokerage account trades in other investments, or retrieve funds from a money market mutual fund—generally assets are available daily.

What is a money market mutual fund?

A money market fund is a type of mutual fund that has relatively low risks compared to other mutual funds and most other investments and historically has had lower returns. Money market funds invest in high quality, short-term debt securities and pay dividends that generally reflect short-term interest rates.

What are the risks of money market mutual funds?

Because they invest in fixed income securities, money market funds and ultra-short duration funds are subject to three main risks: interest rate risk, liquidity risk and credit risk.

What advantages do the mutual funds offer compared to the company stock explain?

Instant diversification — Because you're investing in a basket of assets, you have instant diversification, and therefore lower risk, and don't need to buy multiple individual stocks to diversify your portfolio.

Why are mutual funds considered a better investment?

Mutual funds are generally considered a safer investment than stocks because they offer built-in diversification—something that helps mitigate the risk and volatility in your portfolio.

How does a mutual fund increase its value?

Mutual fund returns can come from several sources: Appreciation in the fund's NAV, which happens if the fund's investments increase in price while you own the fund. Income earned from dividends on stocks or interest on bonds. Capital gains or profits incurred when the fund sells investments that have increased in price.

What are money market funds for dummies?

Money market funds are a category of debt mutual funds that invest their assets in highly liquid assets such as cash and cash equivalents. These funds offer high liquidity coupled with a low level of risk. It is worth remembering that they are not as safe as cash, however, their risk level is extremely low.

Are funds in a money market mutual fund money?

Mutual funds and money market funds are both pools of money invested by professional money managers. There are thousands of mutual funds available, and their risks vary widely from blue-chip conservative to highly speculative. A money market fund invests only in low-risk short-term debt such as Treasury bills.

Which of the following are common mistakes when managing cash needs?

Common mistakes made when managing current cash needs include: lacking sufficient liquid assets to leaving funds in low-interest accounts too long. saving too much money. using savings for current expenses. delaying a purchase for a lower price.

Do value funds pay dividends?

Additionally, value funds don't emphasize growth above all, so even if the stock doesn't appreciate, investors typically benefit from dividend payments. Value stocks have more limited upside potential and, therefore, can be safer investments than growth stocks.

Are mutual funds high or low risk?

Because most mutual funds offer a level of built-in diversification, they're typically considered a lower risk investment. However, as with all investments, there are still risks involved, and mutual fund returns aren't guaranteed.

Which type of investment is likely to have the highest risk?

The highest risk investments are cryptocurrency, individual stocks, private companies, peer-to-peer lending, hedge funds and private equity funds. High-risk, volatile investments may bring high rewards, or they may bring high loss.

Can a money market mutual fund lose value?

All investments are subject to market risk, including possible loss of principal. Retail Money Market Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so.

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