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 place
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 place
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter3: Data Visualization
Section: Chapter Questions
Problem 10P: The file Fortune500 contains data for profits and market capitalizations from a recent sample of...
Related questions
Question
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
![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
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F84e437e0-963d-43f5-93f0-25b76fe313cb%2F07096a0d-8561-4022-aac6-2a58b14d49ce%2F3jdx2jh_processed.png&w=3840&q=75)
Transcribed Image Text: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
%
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Essentials of Business Analytics (MindTap Course …](https://www.bartleby.com/isbn_cover_images/9781305627734/9781305627734_smallCoverImage.gif)
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
![Essentials of Business Analytics (MindTap Course …](https://www.bartleby.com/isbn_cover_images/9781305627734/9781305627734_smallCoverImage.gif)
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning