Money Market Mutual Funds

Contents Introduction2 Role of bullion Market Funds2 commercialised Paper An preference source for financing3 Breaking the dollar sign4 Damage Control6 Regulations and the future: Floating NAV7 butts 19 Exhibit 29 Bibliography10 Introduction specie Market Mutual Funds ar open ended mutual funds that invest on short term debt instruments such US Treasuries, commercial paper issued by financial and non-financial institutions, repurchase agreement and certificate of deposits (CDs). MMMFs be regulated by SEC under the Investment political hitty Act of 1940 rule 2a-7. Based on this rule MMMFs be stipulated to buy only highly rated debt securities with very low essay and shot term maturities. The portfolio must maintain a dull average maturity (WAM) of 60 days or slight and not invest more than 5% in any one issuer, except for government securities and repurchase agreements 1. Role of Money Market Funds Households, small business and corporations need to park their bills on short term basis for future use. ideally these short term cash surpluses could earn interest to overthrow the opportunity cost of being idle but unfortunately there are very few instruments that allow spiritual rebirth at par (face value) under all circumstances.

An investment in Treasury bond may have no attribute risk but might suffer capital losses. For this yard checking and saving accounts act as a better alternative as they allow full withdrawal at par but may pay very little to no interests. Also cash deposited into bank accounts are insured by FDIC up to $250,000. A cash deposit beyond this particularise is exposed to the risk of loss. Since their inception in 1971, MMMFs objective was to tin an investment strategy which is safe and offer returns that are war-ridden with short-term CDs but, unlike CDs, they are 100% liquid. Therefore MMMFs seek to limit exposure due to credit, market and liquidity risks. The Money market funds became an alternative to bank deposits providing... If you want to set forth a full essay, order it on our website: Orderessay

If you want to get a full essay, wisit our page: write my essay .