1. Please explain what is a callable bond. Why would a firm call a bond?
2. Please calculate the value of a 30 year bond with a 10% coupon, that is due in 8 years, with current interest rates of 6%. Please explain why it would be a premium or discount bond.
3. A treasury bond that you own at the beginning of the year is worth $1,055. During the year it pays $39 in interest payments and ends the year valued at $1,065. What was your dollar return and percent return? (Round your "Percent return" to 2 decimal places.)