Final answer:
The Yield to Maturity (YTM) is the total return expected on a bond if held to maturity, factoring in both interest payments and price changes. The coupon rate is provided, but the YTM would be calculated considering current sale price, coupon payments, and time value of money, usually requiring a financial calculator or formula.
Step-by-step explanation:
The student is asking for assistance in calculating the Yield to Maturity (YTM) of a bond. West Corporation issued 12-year bonds with a coupon rate of 9.2 percent, which currently sell for 104 percent of par value. Since the bonds make semiannual payments and were issued 2 years ago, to find the YTM we need to understand it reflects the total return comprising interest payments and potential capital gains or losses.
To calculate the YTM, we'll need to consider the price at which the bonds are selling currently, the face value they will return at maturity, and the coupon payments that the investor will receive every six months. The YTM is essentially the internal rate of return of the bond, given its current price, the coupon payments, and its value at maturity.
We'd apply a financial formula or a financial calculator to derive the precise percentage that is the YTM, which accounts for the time value of money. However, the YTM would not be simply calculated as a straightforward proportion like a simple yield, due to the complexity of the bond's cash flows over its remaining life and the compounding of interest.