The stock market data is given in the following table. 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 ( /bar (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 CoefficientsTelmexTelmexMexicoWorld1.00Mexico0.75WorldSD(%)R (%)0.5020?1.000.60121.0081412The above table provides the correlations among Telmex, a telephone or communication company located in Mexico, the Mexicostock 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 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.Equity cost%

Equity cost of capital refers to an expense that is associated with the business through raising…

Answered: The stock market data is given in the…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter13: Direct Foreign Investment

Section: Chapter Questions

Problem 1IEE

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The stock market data is given in the following table. 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 ( /bar (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
Telmex
Mexico
World
1.00
Mexico
0.75
World
SD(%)
R (%)
0.50
20
?
1.00
0.60
12
1.00
8
14
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 ).
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.
Equity cost
%

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