money-market fund

money-market fund

money-market fund type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper , and certificates of deposit. Returns of money-market funds usually parallel the movement of short-term interest rates. Some funds buy only U.S. government securities, such as Treasury bills, while general-purpose funds invest in various types of short-term paper. They became enormously popular with investors in the early 1980s because of their high yields, relative safety, and high liquidity. Investment in money-market funds soared from $20 billion in the late 1970s to over $150 billion in the early 1980s. Much of the growth came at the expense of banks and thrift institutions. With the recession of the late 1980s and early 1990s, interest rates (and, temporarily, the popularity of the funds) dropped. By 2008, some $3.5 trillion was invested in U.S. money-market funds when concerns about real and potential investment losses as a result of the global financial crisis led to sizable withdrawals from the funds; as a result, the Treasury dept. temporarily guaranteed the funds against losses.

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money-market deposit account

money-market deposit account (MMDA) A high-yielding savings account introduced in the USA in 1982 to allow deposit-taking institutions to compete with the money markets for savers' funds. As long as the account has a balance of more than $1000 there is no regulatory limit on the account. Balances below $1000 attract a lower rate of interest. Restrictions on the account apply to withdrawals (three a month) and transfers for bill payment (three a month).

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"money-market deposit account." A Dictionary of Business. 2006. Encyclopedia.com. 1 Jun. 2012 <http://www.encyclopedia.com>.

"money-market deposit account." A Dictionary of Business. 2006. Encyclopedia.com. (June 1, 2012). http://www.encyclopedia.com/doc/1O18-moneymarketdepositaccount.html

"money-market deposit account." A Dictionary of Business. 2006. Retrieved June 01, 2012 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O18-moneymarketdepositaccount.html

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