Question: The stock market data given by the following table. Correlation Coefficients Telmex Mexico World SD (%) RR (%) Telmex 1.00 1.50 1.00 18 ? Mexico

The stock market data given by the following table.

	Correlation Coefficients
	Telmex	Mexico	World	SD(%)	RR (%)
Telmex	1.00	1.50	1.00	18	?
Mexico		1.00	1.20	15	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 ( RR ). The risk-free rate is 9%.

Suppose now that Telmex has made its shares tradable internationally via crosslisting on the NYSE. Again using the CAPM paradigm, estimate Telmexs equity cost of capital

Equity cost:

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