Economics
posted by Tracey on .
Suppose that the price of a stock is $50 at the beginning of a year and $53 at the end of the year, and it pays a dividend of $2 during the year. Calculate the stock’s current yield, capitalgains yield, and the return. Show your work for three separate calculations.

Suppose that the price of a stock is $50 at the beginning of a year and $53 at the end of the year, and it pays a dividend of $2 during the year. Calculate the stock’s current yield, capitalgains yield, and the return. Show your work for three separate calculations.
Use the capitalasset pricing model to predict the returns next year of the following stocks, if you expect the return to holding stocks to be 12 percent on average, and the interest rate on threemonth Tbills will be two percent. Calculate a stock with a beta of 0.3, 0.7, and 1.6. Show your work for three separate calculations. 
Current Yield  $2/$50 = 4%
Capital Gains  ($53$50)/50 = 6%
Return:  4% + 6% = 10%
Hope this helps.