Today is 15 May 2021. Darren has just purchased a Treasury bond with a face value of $100, maturing at par and paying coupon at j₂ = 3.4% p.a. The purchase price was $100.126. The maturity date of this bond is 15 May 2023.

d) Which of following statements is incorrect?

a.

The purchase price of this Treasury bond will decrease, if this Treasury bond is subject to a 30% tax on interest and capital gain.

b.

We can use the duration of this Treasury bond to measure its price sensitivity.

c.

The purchase price (i.e., 100.126) of this Treasury bond will increase if the yield rate at purchase is lower.

d.

The duration of this Treasury bond will be higher if its coupon rate is higher