You observe the following set of spot rates: You also infer the set of implied forward rates You also estimate that future interest rate volatility is 10%, which leads to the following binomial interest rate tree: 1. What is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is not callable? 2. Assume no interest rates volatility. What is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is callable at par exactly in 1 and 2 years? 3. Given estimated above 10% volatlity, what is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is callable at par exactly in 1 and 2 years? 4. What would happen with this bond's value if it would be callable at $99 instead? 5. What would happen with this bond's value if interest rates volatility would be 15% rarther than 10% ? 6. What would happen with this bond's duration if interest rates increase? (increase/ decrease/ unchanged) 7. Firms are more likely to issue callable bonds when yield is (high/low/firm's yield is irrelevant) 1. What is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is not callable? 2. Assume no interest rates volatility. What is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is callable at par exactly in 1 and 2 years? 3. Given estimated above 10% volatlity, what is the value of a bond that matures in exactly 3 years, has par value of $100, an annual coupon of 3%, and is callable at par exactly in 1 and 2 years? 4. What would happen with this bond's value if it would be callable at $99 instead? 5. What would happen with this bond's value if interest rates volatility would be 15% rarther than 10% ? 6. What would happen with this bond's duration if interest rates increase? (increase/ decrease/ unchanged) 7. Firms are more likely to issue callable bonds when yield is (high/low/firm's yield is irrelevant)