Comprehensive and Detailed Explanation From Exact Extract:
Money market funds invest in short-term securities that generate interest income, and their unit value remains constant (typically $10), preventing capital gains. The feedback from the document states:
"All returns earned on money market funds are considered interest earnings and are taxed as interest income. Since money market funds invest only in money market securities that pay interest, no other type of income can be earned. Because the value of the units of a money market fund is constant ($10), no capital gains can be made on the sale of units of the fund."
[Reference:Chapter 11 – Conservative Mutual Fund ProductsLearning Domain:Analysis of Mutual Funds, ]
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