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What share price do government and retail money market funds try to hold?
AA stable $1.00 per share
BA stable $10.00 per share
CA price floating with the index
DA price set by exchange trading
Answer & Solution
Correct answer: A. A stable $1.00 per share
1. A money market fund is a type of mutual fund holding high-quality, short-term investments.
2. Government and retail money market funds try to keep their NAV stable at $1.00 per share.
3. The NAV may still fall below $1.00 if the fund's investments perform poorly, so the price is a target and not a guarantee.
4. Other money market funds carry a floating NAV that moves with the market value of their portfolio securities.
_Source: US SEC Office of Investor Education and Advocacy, "Mutual Funds and ETFs: A Guide for Investors", section Money Market Funds_
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