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Index Funds Videos 123 videos

Finance: What is the Dow Theory?
11 Views

What is the Dow Theory? Dow Theory is a collection of indicators and definitions of the types of market signals for indicating a Bull or Bear marke...

Finance: What is Efficient Markets Theory?
141 Views

What is the Efficient Markets Theory? The Efficient Markets Theory says that stocks trade at their fair value all of the time, assuming all informa...

Finance: What is a Fund of Funds?
5 Views

What is a Fund of Funds? A fund of funds is a mutual fund strategy that invests in other funds rather than investing in stocks or bonds. The underl...

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Finance: What is a Money Market Fund? 80 Views


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Description:

What is a Money Market Fund/Commercial Paper? Money Market Funds are mutual funds that are very safe and liquid. They invest in cash and securities with short-term maturities. Commercial paper is similar in that it has the short-term aspect. It is different because it’s issued by companies and used to take care of various financial obligations in the short term, or to buy inventory.

Language:
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Transcript

00:00

finance a la shmoop. what is a money market fund? isn't it a strange concept

00:08

to think about going to a market to buy money? [man walks through grocery store]

00:12

well yeah it's strange but the practice exists and it's a huge multi trillion

00:17

dollar market today. the key word here is money and not investment. why such a big

00:23

diff? well because the notion of investing implies duration. that is when

00:28

you invest in a nice fixer-upper home or a tractor distribution company or shares

00:34

in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]

00:40

like years maybe decades maybe centuries if you can find the right miracle pill.

00:44

but here we're talking about money like the stuff you can buy candy with. so it's

00:49

short term not long and a money market fund basically comprises many series of

00:55

pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]

01:00

longer than that sometimes shorter but generally in the very near future. so why

01:04

would you care about a money market fund? well because it pays you slightly more

01:09

interest on your money than say a bank checking account. and lots of people in

01:13

corporations need cash just sitting around to pay their bills, so there are

01:18

tons of money market funds out there available and that's the gist of a money

01:21

market fund. we're sure you'll have plenty of experience with them by the

01:25

time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]

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