The stock market data is given in the following table.The stock market data is given in the following table.

The above table provides the correlations among Telmex, a telephone or 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 $(\frac{?}{\text{b}\text{a}\text{r}}(R)).$

The risk$-$free rate is $8\%.$

Required:

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.

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.

Equity cost

Correlation Coefficients

Telmex Mexico World SD$(\%)$ R$$

$(\%)$

Telmex $1\mathrm{.}001\mathrm{.}200\mathrm{.}9024?$

Mexico $1\mathrm{.}001\mathrm{.}052014$

World $1\mathrm{.}001512$

The above table provides the correlations among Telmex, a telephone or 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 $8\%.$

Required:

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.