(b) Compute the world beta of Telmex. (c) Suppose the Mexican stock market is segmented...
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Accounting
(b) Compute the world beta of Telmex.
(c) 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.
(d) Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmexs equity cost of capital.
(Answer with steps please)
SD(%) R(%) Correlation Coefficients TelmexMexico World 1.00 0.80 0.45 Telmex 20 ? Mexico 1.00 0.75 16 14 World 1.00 12 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 7%. (a) Compute the domestic country beta of telmex
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