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Current Yield and Total Return

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Microsystems Common Stock is selling for $80 per share and pays a cash dividend of $2.40 per share. How would you calculate the current yield?

If the same stock is expected to rise to $86.40 in the nest year, what would be the total dollar amount return? The total expected rate of return investors can expect from this stock?

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Solution Summary

The solution explains how to calculate the current yield and the total dollar and rate of return

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Current Yield is the return that you get from any investment. This is calculated by dividing the income from the investment by the amount invested. For a bond, current yield is given by the annual interest divided by the price of the bond. For stocks, the current yield is the dividend divided by the price of the stock. In this case the dividend is $2.40 and the price is $80. The ...

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