Question
Suppose youre evaluating three alternative MMMF investments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 3.2 percent.
Suppose youre evaluating three alternative MMMF investments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 3.2 percent. The second fund buys only taxable, short-term commercial paper and yields 4.9 percent. The third fund specializes in the municipal debt from the state of New Jersey and yields 3.0 percent. If you are a New Jersey resident, your federal tax bracket is 35 percent, and your state tax bracket is 8 percent, which of these three MMMFs offers you the highest aftertax yield?
QUESTION BELOW
In the previous problem, which MMMF offers you the highest yield if you are a resident of Texas, which has no state income tax?
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