Solution-Assignment on correlation coefficients

Assignment on correlation coefficients

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Reference no: EM133112136

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%)

Reference no: EM133112136

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Assignment on correlation coefficients

Reference no: EM133112136

Reference no: EM133112136

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