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  • Moneeeey Market About Maam Delloro

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    Jan Dane
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    Investors in the money market are highly risk averse as evidenced by their preference for short-term securities that do not last more than a year and avoid default and interest rate risk. When earning modest returns of 2-3% in these accounts, small annual fees can significantly erode profits, especially as inflation runs above the rate of return, meaning the investor's purchasing power declines each year.

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    Moneeeey Market about maam delloro

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    Investors in the money market are highly risk averse as evidenced by their preference for short-term securities that do not last more than a year and avoid default and interest rate risk. When earning modest returns of 2-3% in these accounts, small annual fees can significantly erode profits, especially as inflation runs above the rate of return, meaning the investor's purchasing power declines each year.

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    7 views1 page

    Moneeeey Market About Maam Delloro

    Uploaded by

    Jan Dane
    Investors in the money market are highly risk averse as evidenced by their preference for short-term securities that do not last more than a year and avoid default and interest rate risk. When earning modest returns of 2-3% in these accounts, small annual fees can significantly erode profits, especially as inflation runs above the rate of return, meaning the investor's purchasing power declines each year.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Are investors in the money market best characterized as having a strong appetite for risk or being

    highly risk averse? What evidence would you use to support your answer?

    Investors have strong risk aversion for default and interest rate changes, this is true seeing as
    securities in the money market do not last more than a year.
    If an investor is generating a 3% return in their money market account, but inflation is humming
    along at 4%, the investor is essentially losing purchasing power each year.
    When investors are earning 2% or 3% in a money market account, even small annual fees can eat
    up a substantial chunk of the profit. This may make it even more difficult for money market investors
    to keep pace with inflation. Depending on the account or fund, fees can vary in their negative impact
    on returns. If, for example, an individual maintains $5,000 in a money market account that yields 3%
    annually, and the individual is charged $30 in fees, the total return can be impacted quite
    dramatically.

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