write down the present value equation which would be used

Write down the present value equation which would be used to calculate the yield to maturity on a Treasury security issued 25 years ago with a $100,000 face value and annual coupon payments of $6, 625 assuming it's current market price is $120,000 and that it now has 5 years left to maturity. b) Suppose an investor expected to sell this security in 6 months instead of holding it until maturity. Would the expected rate of return to investing in this security necessarily equal its yield to maturity? Explain your answer clearly, using the Treasury Bond market's "required rate of return" concept. Prior to the 1980's the market for mortgage backed bonds basically did not exist. By the early years of this century (even before growth of the market for bonds backed by subprime mortgages) the market for mortgage backed bonds had grown to be larger in daily trading volume than any other market except that for US treasury securities. Discuss the reasons for the rapid growth of the market for mortgage backed bonds, Today (Oct. 3, 2016) the yield on a 10 year maturity TIP (Treasury Inflation Protection Security) is -.005%, while the yield on a 10 year maturity regular Treasury note is 1.624%. In October 2015 the 10 year TIP yield was .491% while the yield on the regular 10 year T-Note was 2.03%. a) What does this data suggest about the change in investors' inflation expectations since Oct. 2015? Be numerically precise for full credit. b) What does this change suggest about the change in the required real rate of return on US Treasury securities? Be numerically precise for full credit. c) What assumption must you make about the required real rate of return on Tips relative to the required real rate of return on US Treasuries of similar maturity in order to derive your answer to part (a)? Assume that the bonds of highly leveraged ByHy corporation currently have a yield to maturity of 8 % and are due to mature in 1 year. Meanwhile, assume that 1 year Treasury securities are yielding 1 %. Also assume that investors expect that there is a 4% probability that ByHy corporation will default within the next year and that if it defaults they will only be able to recover 30% of the maturity value of the corporation's bonds. a) Suppose that several prominent highly leveraged corporations (other than ByHy) default on their bonds. What would you expect to happen to the price of ByHy's bonds and why