Question

Suppose you're evaluating three alternative MMMF investments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 4.1 percent. The second fund buys only taxable, short-term commercial paper and yields 6.4 percent. The third fund specializes in the municpal debt from the state of New Jersey and yields 4.3 percent you are a New Jersey resident, your federal tax bracket is 30 percent, and your state tax bracket is 7 percent Calculate the sum of after-tax percentage yield of the three alternatives. (Round your answer to 2 decimal places. Omit the sign in your response)

Answer 1

Answer Page No 0 this the alternatives er het hoof abbey beate percentages of Alternative 1 : Diversified perfolio of municipal Securities from acrom the country After Har percentage yield = 41% – (4.17 X7 7:) =4014-(0.041X0.07) = 4:17. - 0.287 % = 3.813 %. 3.81, Alternative 2.7 Taxable, short term commercial papers After fax percentage yield = 6.4%; – (6:47. * (30%+)) = 6.4% – 10.064 X0:37) 6.4.. - 0.02368 = 6:47. - 8.368 % = 41030% A 4.03% S

- Page No ③ Alternative 3 : Municipal debt from state of new Jersey After-tax percentage yield - 4.3%. Sum of abter fax percentage yield of the three alternative = 3.81 %. + 40034 + 4.34. = 12.14 % ñ 12:14 f. Sum of abber tax percentage yield of the three alternatives . = 12:14.7.