Question: A two year zero coupon bond is priced to yield 9% semi-annual. An investor holds the bond to maturity. Inflation in the first year was

A two year zero coupon bond is priced to yield 9%

A two year zero coupon bond is priced to yield 9% semi-annual. An investor holds the bond to maturity. Inflation in the first year was 3.25% annual. In the second year inflation was 3.75% annual. What was the investor's real return, compounded annually? Enter your answer as a percentage. (2 marks)

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