What is a Treasury bond? Treasury bonds, often referred to as T-bonds, are long-term loans made to the U.S. government. When you buy a Treasury bond, you’re essentially lending money to the federal government. In return, the government agrees to pay you a fixed rate of interest every...
One difference from other mutual funds is that many money market funds aim to maintain a net asset value of $1 (which essentially means $1 per fund share). Any interest earned by the fund that's in excess of the amount needed to keep shares at $1 each is distributed to account hold...
A money market fund is just a type ofmutual fundinvested in short-term debt securities. We like to describe mutual funds like this: If a group of people were standing around an empty bowl and each person threw in a $100 bill, they would bemutually fundingthe bowl. Makes sense, right?
Funds in a money market account are protected by the Federal Deposit Insurance Corporation (FDIC) at banks and the National Credit Union Administration (NCUA) at credit unions. The standard FDIC deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership categ...
What is the difference between a money market account and a money market fund? While money market accounts and money market funds have similar names, they are very different. Most notably, money market funds are not covered by FDIC insurance, and you could lose your principal. Here is a bre...
Money market and other mutual funds traditionally havenotbeen insured by the federal government, unlike money market deposit accounts. In response to the events of September 2008, however, the US Treasury Department announced a temporary guarantee program for US market funds. Before investing in a ...
While bank money market accounts are insured under the Federal Deposit Insurance Corp., prime money market funds offered by mutual fund companies do not have this protection. If a mutual fund holding your prime money market account goes bankrupt, you will lose your investment. However, money mark...
The federal funds rate is a crucial macroeconomic concept. Here are some essential points to keep in mind: The federal funds rate is theinterest rate banks use to lend money to each other overnight. All banks must keep a portion of their deposits as a reserve, based on a reserve requireme...
A hedge fund is an investment type that is distinct from mutual funds or ETFs. This fund is an actively managed fund made available to accredited investors. A hedge fund faces less federal regulation and is therefore able to invest in a variety of asset classes using a wide range of strateg...
Occasionally, a money market fund may fall below the $1 NAV. This creates a condition that is sometimes referred to with the colloquial term "breaking the buck." When this condition occurs, it may be attributed to temporary price fluctuations in the money markets. However, if it persists, t...