Janice Wilcox is a wealthy investor who's looking for a tax shelter. Janice is in the maximum $(37\%)$ federal tax bracket and lives in a state with a

very high state income tax. $($She pays the maximum of $12\mathrm{.}3\%$ in state income tax.$)$ Janice is currently looking at two municipal bonds, both of which

are selling at par. One is a AA$-$rated in$-$state bond that carries a coupon of $7\mathrm{.}064\%.$ The other is a AA$-$rated, out$-$of$-$state bond that carries a coupon

of $7\mathrm{.}801\%.$ Her broker has informed her that comparable fully taxable corporate bonds are currently available with yields of $10\mathrm{.}199\%.$ Alternatively,

long Treasuries are now available at yields of $9\mathrm{.}485\%.$ She has $$100,000$ to invest, and because all the bonds are high$-$quality issues, she wants to

select the one that will give her maximum after$-$tax returns.

a$.$ Which one of the four bonds should she buy?

b$.$ Rank the four bonds $($from best to worst$)$ in terms of their taxable equivalent yields.

a$.$ The taxable equivalent yield on the in$-$state municipal bond is

$\%.($Round to three decimal places.$)$