Which of the following responses best characterizes a money market mutual fund?

Money market mutual funds invest in highly liquid, short-term debt instruments, such as Treasury bills, commercial paper, and certificates of deposit. While the funds aim to maintain a stable $1 NAV, this is not guaranteed.

C is correctbecause the fund’s investments are short term.

Ais incorrect because the rate of return is not fixed; it varies with market interest rates.

Bis incorrect because while the fund tries to maintain a $1 NAV, it is not guaranteed.

Dis incorrect because yields do not always exceed those of savings accounts.