Money market funds usually offer all the following advantages except:
A. higher returns than savings or checking accounts.
B. deposit insurance.
C. wire transfer privileges.
D. check writing privileges.
B?
B is correct.
Thank you
You're welcome, Ciaria.
All of the following are advantages of using the services of an investment company except:
To confirm the correct answer, let's go through each option and analyze if it is an advantage of money market funds:
A. Higher returns than savings or checking accounts: Money market funds generally offer higher returns compared to traditional savings or checking accounts. This makes them an attractive investment option for individuals looking to earn more on their cash holdings. Therefore, this option is an advantage of money market funds.
B. Deposit insurance: Unlike bank deposits such as savings or checking accounts, money market funds are not insured by the Federal Deposit Insurance Corporation (FDIC). This means that in case of loss or default, the investor bears the risk of losing some or all of their principal investment. Therefore, deposit insurance is not an advantage of money market funds. This option is correct; it is an exception to the advantages of money market funds.
C. Wire transfer privileges: Money market funds typically offer wire transfer privileges, allowing investors to quickly and efficiently move money in and out of the fund. This adds convenience and flexibility when managing funds. Therefore, wire transfer privileges are an advantage of money market funds.
D. Check writing privileges: Some money market funds offer check writing privileges, allowing investors to write checks against their account balance. This can be useful for making payments and transactions directly from the fund. Therefore, check writing privileges are also an advantage of money market funds.
Based on the analysis, the correct answer is B. Money market funds do not offer deposit insurance.