w55) Correlation Coefficients

	Telmex	Mexico	World	SD(%)	E(R) (%)
Telmex	1.00	0.9	0.27	17.5	?
Mexico		1.00	0.5	15	14.3
World			1.00	11.3	11.7

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 E(R). The risk-free rate is 4.6%. Suppose the Mexican stock market is segmented from the rest of the world. Using the CAPM paradigm, estimate the equity cost of capital of Telmex (XX.XX%)