(a) If you earned 3 percent per year in a tax-free money market fund and you were in the 31 percent federal income tax bracket and were fortunate enough to live in a state that had no state income tax, what interest rate would you have to earn in a taxable money market fund or bank account to be equally well off?

(b) What if your state had a 6 percent income tax but did not levy it on interest earned on municipal security obligations issued in your state – which were the only type of securities that your tax-exempt fund bought?