What Does It Mean for a Money Market Mutual Fund

question 33

Multiple Choice

What does it mean for a money market mutual fund to "break the buck"?

• A) The value of its share declines below $1.
• B) It incurs losses on its investments.
• C) It increases its fees to more than 1% of net asset value.
• D) It is unable to meet the demand for withdrawals by investors.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, freedom of entry and exit, and a product that is homogeneous across suppliers, where no single buyer or seller can influence the market price.

Sellers

Individuals or entities that offer goods or services to buyers in exchange for money or other valuable consideration.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net societal welfare loss.

Side Effects

Unintended consequences or secondary effects resulting from an action or decision, often seen in medicine, economics, and environmental policy.