Which of the following statements is NOT correct?
A)Commercial paper is commonly purchased by money market funds.
B)Money market funds usually have a low level of credit risk.
C)Money market funds tend to have lower interest rate risk than bond funds.
D)If money market fund managers expect interest rates to decrease, they should use funds generated from maturing securities to purchase new securities with shorter maturities.

Question

Quizplus · Accepted Answer

Money market fund managers expecting a decrease in interest rates would likely seek to lock in current higher rates by purchasing new securities with longer, not shorter, maturities. This strategy would help maintain higher yields for the fund during a period of falling interest rates.

Which of the Following Statements Is NOT Correct