Why might money market mutual funds encourage risk-taking?

Expert Solution

Firs of all we must know the risks in mutual funds

RISKS:

All funds have some degree of risk. With common assets, you may lose a few or the entirety of the cash you contribute in light of the fact that the protections held by an asset can go down in esteem. Profits or premium installments may likewise change as economic situations change.

WHY IT IS CALLED A RISK:

Like all protections, common assets are liable to advertise, or methodical, risk. This is on the grounds that its absolutely impossible to foresee what will occur later on or whether a given resource will increment or diminishing in esteem. Since the market can't be precisely anticipated or totally controlled, no venture is risk free.

And now coming to why market money mutual funds encourage risk taking ,

In my point of view in some fields we have to take risk in order to earn something big. mutual funds company is absolutely a risk taking factor, because we can't predict precisely. Some companies are like , they follow some strategy like " no risk no gain " . Among them the mutual funds is one.

Rahul Sunny answered 2 years ago

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