Suppose you're evaluating three alternative MMMF investments. The first fund buys a diversified portfolio of municipal securities from

across the country and yields $3$ percent. The second fund buys only taxable, short$-$term commercial paper and yields $5\mathrm{.}2$ percent. The

third fund specializes in the municipal debt from the state of New Jersey and yields $2\mathrm{.}7$ percent. You are a New Jersey resident, your

federal tax bracket is $35$ percent, and your state tax bracket is $8$ percent. $($Assume your state taxes do not affect your federal taxable

income.$)$

a$.$ Calculate the aftertax yield for each of the alternatives.

Note: Do not round intermediate calculations. Enter your answers as a percent rounded to $2$ decimal places.

b$.$ Which of these three MMMFs offers you the highest aftertax yield?

Municipal Fund

New Jersey Fund

Taxable Fund