$13\mathrm{.}6$ Nestl$$ of Switzerland Revisited. Nestl$$ of Swit$-$

zerland is revisiting its cost of equity analysis. As a

result of extraordinary actions by the Swiss Central

Bank, the Swiss bond index yield $(10-$year maturity$)$

has dropped to a record low of $0\mathrm{.}520\%.$ The Swiss

equity markets have been averaging $8\mathrm{.}400\%$ returns,

while the Financial Times global equity market re$-$

turns, indexed back to Swiss francs, are at $8\mathrm{.}820\%.$

Nestle's corporate treasury staff has estimated the

company's domestic beta at $0\mathrm{.}825$ but its global beta

$($against the larger global equity market portfolio$)$

at $\mathrm{.}515.$

a$.$ What is Nestle's cost of equity based on the do$-$

mestic portfolio of a Swiss investor?

b$.$ What is Nestle's cost of equity based on a global

portfolio for a Swiss investor?