Question: please need correct answer thanks R (%) 15 Question 2 (5 marks) Based on the stock market data given by the following table. Correlation Coefficients
R (%) 15 Question 2 (5 marks) Based on the stock market data given by the following table. Correlation Coefficients Telmex Mexico World SD%) Telmex 1.00 .90 0.60 18 Mexico 1.00 0.75 14 World 1.00 10 12 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 5%. Required: 1. Compute the domestic country beta of Telmex as well as its world beta. What do these betas (4 marks] measure? 2. Suppose the Mexican stock market is segmented from the rest of the world. Using the [1 mark] CAPM paradigm, estimate the equity cost of capital of Telmex
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
