The table below provides the correlations among Telmex, a telephone/communication company located in Mexico, the Mexican Stock Market index, and the world market index, together with the standard deviation (SD) of returns and the expected returns R. The risk free rate is 5%. 5. Correlation Coefficients Telmex Mexico World SD(96) Telmex Mexico World R(96) 18? 15 10 0.9 0.6 0.75 14 12 1 Compute the domestic beta of Telmex as well as its world beta. What do these betas measure? Suppose the Mexican Stock Market is segmented from the rest of the world. Using the CAPM paradigm, estimated the equity cost of capital of Telmex. Suppose now that Telmex has made its share tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex's equity cost of capital. Discuss the possible effects of international pricing of Telmex shares on the share prices and firm's investment decisions. a) b) c)