What risk is commonly associated with Money Market Securities?

Money market securities are typically low-risk instruments that are short-term in nature, often including Treasury bills, commercial paper, and certificates of deposit. The primary risk associated with money market securities is credit risk, which refers to the possibility that the issuer of the security may default and be unable to fulfill its obligations to pay back the principal or interest. This risk is particularly pertinent in the context of corporate issuers of commercial paper, as the creditworthiness of the issuing company can vary significantly.

While market risk reflects the potential for investment losses due to fluctuations in market prices, money market securities usually have a stable price due to their short maturities. Political risk may affect broader financial markets or specific types of securities but is not a defining characteristic of money markets. Similarly, operational risk relates to failures in processes or systems within an organization and, while it can be relevant, it is not a standard concern specifically associated with money market securities. Therefore, credit risk stands out as the prevalent risk for these types of instruments, making it the correct answer.