HTML Question and Microsoft Word?

For my computer concepts class we were told to create a web page using Microsoft Word by saving it as an HTML file.

Then there were a series of questions which i won't get into much detail about.

My questions are this:

1.Can Microsoft Word be used to write HTML code?

2. One part of the assignment told us to enter HTML tags so that we would see an image (when we open the file as a web page locally), but I only see the HTML tags I entered, How will I be able to see an image instead of the code? (we were given sites with certain images, we can't just copy/past the image)

3. We were told to Embed a Youtube video (the video; not just the URL) into our web page(.htm) using the appropriate HTML code provided by Youtube. How do I do this?

P.S. It gives a Hint that we can open the file in Notepad and change the HTML code directly.. but when I enter the tag in Notepad it shows an image in the Word file (It says to enter HTML tags IN the word file, not an image)