The stock market data is given in the following table. Correlation Coefficients Telmex Mexico World SD(%) R¯¯¯�¯ (%) Telmex 1.00 0.90 0.60 18 ? Mexico 1.00 0.75 15 14 World 1.00 10 12 The above table provides the correlations among Telmex, a telephone or 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¯¯¯R¯ ). The risk-free rate is 8%. Required: Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex’s equity cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
The stock market data is given in the following table. Correlation Coefficients Telmex Mexico World SD(%) R¯¯¯�¯ (%) Telmex 1.00 0.90 0.60 18 ? Mexico 1.00 0.75 15 14 World 1.00 10 12 The above table provides the correlations among Telmex, a telephone or 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¯¯¯R¯ ). The risk-free rate is 8%. Required: Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex’s equity cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
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 stock market data is given in the following table.
| Correlation Coefficients | |||||
| Telmex | Mexico | World | SD(%) | R¯¯¯�¯ (%) | |
|---|---|---|---|---|---|
| Telmex | 1.00 | 0.90 | 0.60 | 18 | ? |
| Mexico | 1.00 | 0.75 | 15 | 14 | |
| World | 1.00 | 10 | 12 |
The above table provides the correlations among Telmex, a telephone or 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¯¯¯R¯ ). The risk-free rate is 8%.
Required:
Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
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