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2. Suppose that the British stock market is integrated with the rest of the world and Chelsfield Company has made its shares tradable internationally via

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2. Suppose that the British stock market is integrated with the rest of the world and Chelsfield Company has made its shares tradable internationally via cross-listing on the NYSE. Using the CAPM and a risk-free rate of 5%, estimate the equity cost of capital for Chelsfield company. Correlation Coefficient Chelsfield England World Company 1.00 0.90 0.60 Return Standard Deviation 20% ? Chelsfield Company England World 1.00 0.80 1.00 18% 15% 14% 12%

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