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An investor pays $800 for a $1000 par bond carrying 5% coupon rate (coupon payments made semi-annually) during a period of economic stress. Over the

An investor pays $800 for a $1000 par bond carrying 5% coupon rate (coupon payments made semi-annually) during a period of economic stress. Over the next few years, she expects the yields to drop to a level at which the value of the bond would increase to $1,200. However, after two years bond yields have risen even higher, so that she is able to sell the bond (at T2, right after the coupon payment) only for $750. Calculate the actual 'realized' rate of return on this investment (expressed as APR2).

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