Question: 2. The below table provides the correlations among SK Telecom (SKT), a leading telecommunication company in S. Korea, the Korean stock market index (KOSPI), and

2. The below table provides the correlations among SK Telecom (SKT),

2. The below table provides the correlations among SK Telecom (SKT), a leading telecommunication company in S. Korea, the Korean stock market index (KOSPI), and the world market index (WORLD), along with the standard deviation (SD) and the expected returns (R). The risk-free interest rate is 3%. Correlation Coefficients S.D.(%) R(%) SKT KOSPI WORLD SKT 1.0 0.85 0.57 13 KOSPI 1.0 0.74 12.5 11 WORLD 1.0 10.5 8 a. Suppose the Korean stock market is isolated from the world market. Using the CAPM, estimate the cost of equity capital of SKT. (4 pts) b. Suppose that SKT has made its shares cross-listed on NASDAQ. Using the CAPM, estimate the cost of equity capital of SKT. (4 pts) c. Based on answers from a and b, discuss the positive effects of cross listing of SKT shares on the share prices and the firm's investment decisions. (4 pts)

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