The stock market data given by the following table. Correlation Coefficients Telmex Mexico World Telmex 1.00 Mexico 0.90 World SD (%) R (%) 0.60 18 ? 1.00 0.75 15 14 1.00 10 12 The above table provides the correlations among Telmex, a telephone/communication company located in Mexico, the Mexico stock market index, and the world market index, together with the standard deviations (SD) of returns and the expected returns (R). The risk-free rate is 4%. Suppose the Mexican stock market is segmented from the rest of the world. Using the CAPM paradigm, estimate the equity cost of capital of Telmex. (Enter your answer as a percent rounded to 2 decimal places.) Equity cost %

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Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.