ANSWERS: 1
  • Treasury money market funds are money market funds that are backed by the U.S. Treasury, according to The New York Times. The U.S. government stated it will guarantee these funds against up to $50 billion in losses.

    Money Market Funds

    Money market funds are short term mutual funds that generally invest in low-risk securities, according to The New York Times. These securities may include certificates of deposit, government securities or asset-backed commercial paper.

    Reason

    Concern about the value of money market funds has caused liquidity strains in world markets. Government backing of these funds may lessen financial turmoil.

    Net Asset Value

    The net asset value of money market funds is generally $1, according to the Department of the Treasury. Those with Treasury money market accounts would be notified that their government insurance was kicking in when that value falls below this amount.

    Fun Fact

    The Treasury was given the right to insure these funds by the Gold Reserve Act of 1934, according to the Department of the Treasury.

    Considerations

    Money market funds are an important source of financing for financial institutions. They are an investment and saving tool for many Americans, according to the Department of the Treasury.

    Considerations

    Source:

    New York Times: Treasury to Guarantee Money Market Funds

    Treasury Department: Treasury Announces Guaranty Program for Money Market Funds

    More Information:

    Investopedia.com: Money Market: Introduction

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