Money Market Fund
A fund of very short-term debt, managed for stability and liquidity.
What is Money Market Fund?
Holds T-bills, commercial paper, and repos, targeting a stable $1.00 share price. Not FDIC insured - stability is a design goal, not a guarantee, as the 2008 Reserve Primary Fund break demonstrated.
Money Market Fund: a worked example
A cash sweep paying 4.8% while offering same-day liquidity.
More terms in Securities & Instruments
Common Stock
An ownership share in a company, with voting rights and last claim on assets.
Preferred Stock
Equity with a fixed dividend and priority over common, usually without votes.
Bond
A loan to an issuer that pays interest and returns principal at maturity.
Coupon Rate
The bond's stated annual interest as a percentage of par.
Yield to Maturity (YTM)
The total annualized return if you buy today and hold to maturity.
Par Value (Face Value)
The principal repaid at maturity, conventionally $1,000 per bond.
Duration
A bond's price sensitivity to a 1% change in interest rates.
Credit Rating
An agency's assessment of an issuer's likelihood of default.