Which of the following best describes a money market fund?

A money market fund is best described as a low-risk investment in short-term securities. These funds primarily invest in highly liquid, short-term instruments such as treasury bills, commercial paper, and certificates of deposit. They are designed to provide investors with a safe place to park their cash while still earning a return, as the securities in which they invest typically have maturities of less than one year.

The appeal of money market funds lies in their relatively stable value and low volatility, making them a suitable option for conservative investors or for those looking to preserve capital while maintaining some level of return. Additionally, because they invest in short-term securities, money market funds are less susceptible to the fluctuations that can affect longer-term investments.

This stands in contrast to the other choices. Long-term investment options focus on bonds or stocks with a longer horizon, often encountering more volatility and risk. High-risk equity funds invest in stocks that have a greater chance of price swings and potential losses. An aggressive investment strategy typically involves aiming for high returns through high-risk assets, which does not align with the conservative nature of money market funds. Thus, describing a money market fund as a low-risk investment in short-term securities accurately reflects its characteristics and primary purpose.