What does a call provision [call feature] allow [bond] issuers to do, and why would they do it”?

1.      What does a call provision [call feature] allow [bond] issuers to do, and why would they do it”?

2.      "Provide the definitions of a discount bond and premium bond. Give examples?

3.      "Describe the differences in interest payments and bond prices between a 5 percent coupon bond and a zero coupon bond”?

4.      "Calculate the price of a zero coupon bond that matures in 20 years if the market interest rate is 6.5 percent”?

o    Assume semi-annual compounding.

5.      "Compute the price of a 4.5 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent”?

o    Assume interest payments are paid semi-annually, and solve using semi-annual compounding.

6.      "A 6.85 percent coupon bond with 26 years left to maturity is offered for sale at $1,035.25. What yield to maturity [interest rate] is the bond offering”?

o    Assume interest payments are paid semi-annually, and solve using semi-annual compounding.

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