Money Market Funds

D

Money market funds are a type of mutual fund that invests in short-term, low-risk debt securities, such as Treasury bills, certificates of deposit, and commercial paper. The purpose of these funds is to provide investors with a safe place to invest their money, while still earning a higher rate of return than they would with a traditional savings account.

Option A is incorrect because money market funds can invest in a variety of short-term debt securities, not just those issued by Federal State and local governments.

Option B is correct. Money market funds strive to maintain a stable net asset value (NAV) of $1.00 per share. This means that the fund's total assets are divided by the number of shares outstanding, and the resulting price should always be $1.00. To achieve this, money market funds typically invest in securities that have a short maturity and low credit risk.

Option C is also correct. Money market funds pay dividends that typically reflect short-term interest rates. The dividends paid by these funds are based on the income generated by the underlying investments, and the income is typically comprised of interest payments.

Therefore, the correct answer is Option D, "All of these."