Money Market Funds & RBC
October 4th, 2011
I just want to clarify a few points about the treatment of money market funds in the RBC calculation:
-the money market funds receive the same RBC factor as cash (0.3%)
-that being said, the charge from the funds (0.3% * amount invested in fund) actually goes towards R2, not R0 (Feldblum stated this in his paper); even though the funds consist of “R0″ types of investments
This is not intuitive at all, and is therefore something that you are going to need to memorize.