Suppose youre 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 5.2 percent. The third fund specializes in the municipal debt from the state of New Jersey and yields 2.7 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.)

1. Calculate the after-tax yield for each of the alternatives. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

	After-tax Yield
Municipal Fund		%
Taxable Fund		%
New Jersey Municipal Fund		%

2. Which of these three MMMFs offers you the highest after-tax yield?

Municipal Fund

Taxable Fund

New Jersey Fund