GO
Loading...

Breaking the Buck: CNBC Explains

In times of severe financial stress, money market funds, which are generally thought to be highly safe investments, have been said to be in danger of “breaking the buck”. The goal of money market funds is to never lose money and maintain a net asset value (NAV), or per-share value, at $1, and when their NAV goes below $1, this is called breaking the buck. But how does this really work and why is it such a rare event? Salman Khan of the Khan Academy explains.

From this video, you’ll understand:

  • How Net Asset Value (NAV) is calculated for money market funds
  • Events that could cause money market funds to ‘break the buck’
  • How ‘breaking the buck’ is traditionally avoided



Contact CNBC Explains

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Latest Special Reports

  • Inside the market's biggest sectors with a look at the trends, companies and trades netting profits for investors.

  • Profiles of philanthropists and entrepreneurs who are addressing huge global challenges—from climate change to hunger.

  • From family-run companies to public companies with family ownership, we tackle challenges and rewards facing family businesses.

Central Banking Explained

Corporate Accounting Explained