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

across the country and yields $4\mathrm{.}4$ percent. The second fund buys only taxable, short$-$term commercial paper and yields $5\mathrm{.}9$ percent.

The third fund specializes in the municipal debt from the state of New Jersey and yields $4\mathrm{.}1$ 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. $($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

Taxable Fund

New Jersey Fund