Multiple choice

An ideal money market mutual fund must have

  1. lower returns

  2. lower expense ratio

  3. low quality of investments

  4. All the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An ideal money market mutual fund should have a lower expense ratio because these funds typically operate on thin margins - the difference between the yields they earn on short-term instruments and what they pay to investors. Lower expenses mean better net returns for investors. The other options (lower returns, low quality investments) are NOT desirable characteristics.

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