Question

Money Market Mutual funds invest in all of the following except:

A) Commercial Paper
B) Corporate Bonds
C) Repurchase Agreements
D) Treasury Bills

Answer 1

Money Market Mutual Funds invest in short-term debt instruments such as Commercial Paper, Repurchase Agreements, and Treasury Bills. B) Corporate Bonds are generally not included.

Step-by-step explanation:

Money Market Mutual Funds invest in short-term debt instruments. Among the options provided,

Commercial PaperRepurchase AgreementsTreasury Bills

These are typically included in such investments, as they are short-term securities with maturities of less than one year, which align with the liquidity requirements of money market funds. Option B) Corporate Bonds, however, are generally not included in Money Market Mutual Funds, as they usually represent longer-term debt with maturities longer than one year and are considered capital market instruments.

Answer 2

Money Market Mutual Funds invest in short-term, high-quality instruments such as Commercial Paper, Repurchase Agreements, and Treasury Bills, but not in Corporate Bonds, which are long-term and part of capital markets.

Step-by-step explanation:

Money Market Mutual Funds typically invest in short-term, high-quality, and liquid financial instruments. These funds aim to provide investors with a safe place to invest easily accessible, cash-equivalent assets. The instruments in which these funds invest often include Commercial Paper, which is an unsecured, short-term debt instrument issued by a corporation, Repurchase Agreements (often called repos), which are short-term borrowing for dealers in government securities, and Treasury Bills (T-Bills), which are short-term government securities with maturity periods of one year or less.

However, Money Market Mutual Funds generally do not invest in Corporate Bonds because these are typically long-term investments with maturities greater than one year, classifying them within capital markets rather than money markets. Therefore, option B 'Corporate Bonds' is the correct answer as it is the one that Money Market Mutual Funds do not invest in.