The stock market data is given in the following table.Correlation CoefficientsTelmexTelmexMexicoWorld1.00MexicoWorldSD (%)R (%)1.200.9024?1.001.0520141.001512The above table provides the correlations among Telmex, a telephone or communicationcompany 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 ). Therisk-free rate is 6%.Required:Suppose now that Telmex has made its shares tradable internationally via cross-listingon NYSE. Again using the CAPM paradigm, estimate Telmex's equity cost of capital.Note: Do not round intermediate calculations. Enter your answer as a percentrounded to 2 decimal places.Equity cost%

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The table below shows standard deviations and correlation coefficients for seven stocks from different countries. Calculate the variance of a portfolio with equal investments in each stock. (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Round your answer to 4 decimal places.) BHP Billiton Siemens Nestlé LVMH Toronto Dominion Bank Samsung BP BHP Billiton 1.00 0.31 0.36 0.40 0.14 0.40 0.14 Siemens 1.00 0.28 0.14 0.14 0.32 –0.10 Nestlé 1.00 0.07 0.08 0.00 0.08 LVMH 1.00 0.35 0.53 –0.09 Toronto Dominion Bank 1.00 0.12 –0.12 Samsung 1.00 –0.11 BP 1.00 Standard deviation (%) 27.00 38.80 49.80 25.30 19.00 39.50 47.40 Portfolio variance
The Standard and Poor's 500 is an index that include 500 of the best US companies and is based on the price of the stocks of said companies. Select one: True False
From the following Table and Chart explain how the Dubai Financial Market General Index (DFMGI) movement during the period May 29, 2021- Nov 24, 2021? And identify any risks faced by investors investing in stocks in UAE financial market?
None
The covariance between the returns on Zion shares and the returns on the ASX200 market index is 0.0112. The standard deviation of the returns on ASX200 is 14%. The standard deviation of the returns on Zion shares is 10%. What is the beta of Zion shares? Group of answer choices0.57 0.16 0.55 0.08 1.12
The stock market data given by the following table. Telmex Mexico World Correlation Coefficients Telmex 1.00 Equity cost Mexico 0.90 1.00 World 0.60 0.75 1.00 % SD (%) 18 15 10 R (%) ? 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 6%. 14 12 Suppose now that Telmex has made its shares tradable internationally via crosslisting on the NYSE. Again using the CAPM paradigm, estimate Telmex's equity cost of capital. (Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places.)
The EV Index is a price weighted stock index based on the 3 largest electric vehicle manufacturers in the nation. Consider these stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. (Please pay close attention to stock split) P0 Q0 P1 Q1 P2 Q2 A 80 200 85 200 90 200 B 60 300 70 300 35 600 C 65 200 67 200 70 200 a. What is the divisor for the price weighted index in year 2?2.69 (sample answer: 2.55) b. What is the price weighted index at t=1? 64 (sample answer: 156.45) c. What is the price weighted index at t=2? 70.63(1sample answer: 56.45)
Category of industry is real estate. The analysis of Market to Book Ratio is as follows: 2015: 0.0072x 2016: 0.0067x 2017: 0.0063x 2018: 0.0040x 2019: 0.0043x a. What is the trend analysis for that Market to Book Ratio and why it is increasing and decreasing?
The S&P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companies, it is a market value-weighted index. This means that each company’s performance is reflected in the index, weighted by the ratio of the company’s value to the total value of all the companies. Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? a. Forecast earnings for S&P 500 companies are expected to rise in the future. b. Forecast earnings for S&P 500 companies are expected to fall in the future. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). To which kind of risk will you primarily be exposed? a.Portfolio risk b.Stand-alone risk Generally, investors would prefer to invest in assets that…
The following information relates to the prices and dividends of two stocks listed on the Ghana Stock Exchange as well as the average market returns. Stock A Price Year 2011 2012 2013 2014 2015 2016 20 24 26 31 33 40 Dix 0 1.2 0.5 1 1.5 2 Stock B Price 11 13 17 20 23 27 Dix 0 1.6 0.5 0.9 1.2 1.5 Market Returns 0 0.25 0.18 0.11 0.12 0.15 Required. a. Calculate the annual returns for each stock (2012-2016) b. Calculate the average returns for each of the stocks and the market c. Calculate the covariance between the stocks d. Assuming the two stocks are equally weighted, calculate the portfolio return and portfolio risk
None
Given the following yearly percentage price changes for 3 market indexes. Compute the Covariance of PSEI & SSE; SSE & RUSSELL 100 Year PSEI SSE RUSSELL 100 1 0.03 0.02 0.04 2 0.07 0.06 0.1 3 -0.02 -0.01 -0.04 4 0.01 0.03 0.03 5 0.05 0.04 0.11 6 0.07 0.06 0.1 7 -0.02 -0.01 -0.04 8 0.01 0.03 0.03 9 0.05 0.04 0.11 10 -0.06 -0.04 -0.08

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