What is the maximum remaining maturity for securities in money market funds?

• A. 365 days or less
• B. 397 days or less
• C. 540 days or less
• D. 730 days or less

Answer: (B)

Money market funds must invest in short-term securities to keep liquidity and a stable share price. Under Rule 2a-7, the securities they hold can have a remaining maturity of up to 397 days. That upper limit (about 13 months minus one day) is designed to minimize interest-rate risk and ensure redemptions can be met promptly. So the maximum allowed maturity is 397 days or less. Choices with shorter caps would be more restrictive than required, while longer caps would exceed the rule.