Which type of money market fund must have a fluctuating NAV?

• A. Short-term money market funds with constant NAV
• B. Short-term money market funds with fluctuating NAV
• C. Money market funds with constant NAV
• D. Money market funds with fluctuating NAV

Answer: (D)

Money market fund share prices can either stay fixed at a set value or move with the fund’s actual underlying asset values. Fixed (stable) NAV funds price shares at a constant amount, typically $1.00, using accounting methods to keep the price steady. They’re commonly used by government and some retail funds. Funds that must have a fluctuating NAV are those that do not guarantee a fixed price—the floating NAV funds—because the value of their investments can change, so the share price must reflect that real value. Regulators have required floating NAV for certain institutional money market funds, so their per‑share price can rise or fall with market conditions. So, the type that must have a fluctuating NAV is money market funds with fluctuating NAV.