$1.$ What is a bond? Describe the variables that are involved in bond pricing. Now, provide a numerical example to show how you would calculate a typical U$.$S$.$ bond price $$ make up your own numbers to show how price is calculated. What is a premium or discount bond and which of these two categories does your bond fit and why? $(4$ pts$)$

$2.$ What is the relation between bond prices and interest rates? For the example you provided above for Q$\mathrm{.}1,$ increase the interest rate on the bond by $2\%$ and recalculate the new price. If your bond was trading at a premium $($discount$),$ is it still trading in the same pattern to par value? Why or why not? $(4$ pts$)$

$3.$ What is the difference between a nominal rate of return and a real rate of return? Is it possible for a real rate of return to be zero or negative $$ how and why? $(2$ pts$).$

$4.$ What is preferred stock and what are two or three of its characteristics? Provide a numerical example that shows the components that go into determining the price of preferred stock $$ make up an example to show how to calculate the price of preferred stock. $(3$ pts$)$

$5.$ What is the dividend discount model? Describe the variables that go into determining the price of common stock. Once again, provide an example of how you would price common stock using the dividend discount model. $(4$ pts$)$

$6.$ Describe the two components of total return for common stock. Once again, provide a numerical example of the same to show how you will calculate the total return using these two components.