Association for Financial Professionals (AFP) Practice Exam 2025 - Free Financial Certification Practice Questions and Study Guide

The focus of the aspect of MMF (Money Market Fund) regulation that addresses the assets held for liquidity is rooted in the liquidity requirements set forth by regulatory bodies. These requirements are designed to ensure that money market funds maintain a sufficient level of liquid assets at all times, enabling them to meet investor redemptions and obligations promptly.

Liquidity requirements typically mandate that a specific percentage of a fund's assets must be in very liquid forms, such as cash or securities that can quickly be converted to cash. This is crucial because money market funds often deal with short-term securities and, in times of market stress, the ability to liquidate assets without significant loss becomes essential.

In contrast, aspects like portfolio rules and permitted investments focus more on the types of securities that can be included in a fund's portfolio rather than on the liquidity aspect itself. Fund pricing rules relate to how the value of the fund’s shares is calculated and reported to investors, which does not directly address the liquidity of assets held. Therefore, these options do not emphasize the critical need for ensuring that sufficient liquid assets are available to meet immediate demands.