An investor pays $800 for a $1000 par bo nd carrying 5% coup on rate (coupon payments made semi-annually) during a period of economic stress

An investor pays $800 for a $1000 par bo

nd carrying 5% coup

on 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 valu

e of the bond would

increase to $1,200. However, after two years

bond yields have ri

sen even higher, so

that she is able to

sell the bond (at T2, ri

ght after the coupon pa

yment) only for $750.

Calculate the actual 'realized' rate of return

on this investment

(expressed as APR2).