Correlation CoefficientsTelmexTelmexMexicoWorld1.00Mexico1.20WorldSD(%)R (%)0.9024?1.001.051.0020141512The above table provides the correlations among Telmex, a telephone or communication company located in Mexico, the Mexicostock 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 6%.Required:Suppose the Mexican stock market is segmented from the rest of the world. Using the CAPM paradigm, estimate the equity cost ofcapital of Telmex.Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Answer is complete but not entirely correct.Equity cost6.36 x %

Estimate the expected return of the Mexican market index:Expected return of Mexican market index =…

Answered: Correlation Coefficients Telmex Telmex…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 36QA

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The stock market data is given in the following table. Correlation Coefficients Telmex Telmex Mexico World 1.00 Mexico World SD (%) R (%) 1.20 0.90 24 ? 1.00 1.05 20 14 1.00 15 12 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 6%. Required: Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex's equity cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Equity cost %
The stock market data given by the following table. Correlation Coefficients Telmex Mexico World SD(%) R⎯⎯⎯R¯ (%) Telmex 1.00 0.75 0.50 20 ? Mexico 1.00 0.60 12 14 World 1.00 8 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⎯⎯⎯R¯ ). The risk-free rate is 7%. Compute the domestic country beta of Telmex as well as its world beta. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
The stock market data is given in the following table. Correlation Coefficients Telmex Mexico World SD(%) R¯¯¯�¯ (%) Telmex 1.00 0.90 0.60 18 ? Mexico 1.00 0.75 15 14 World 1.00 10 12 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¯¯¯R¯ ). The risk-free rate is 8%. Required: Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex’s equity cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
The stock market data given by the following table. Telmex Mexico World Correlation Coefficients Telmex 1.00 Equity cost Mexico 0.90 1.00 World 0.60 0.75 1.00 % SD (%) 18 15 10 R (%) ? 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 6%. 14 12 Suppose now that Telmex has made its shares tradable internationally via crosslisting on the NYSE. Again using the CAPM paradigm, estimate Telmex's equity cost of capital. (Do not round intermediate calculations. Round your answer as a percent rounded to 2 decimal places.)
The stock market data is given in the following table. Correlation Coefficients Telmex Telmex Mexico World 1.00 Mexico World SD (%) R (%) 1.50 1.00 18 ? 1.00 1.20 15 14 1.00 10 12 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 7%. 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
Category of industry is real estate. The analysis of Market to Book Ratio is as follows: 2015: 0.0072x 2016: 0.0067x 2017: 0.0063x 2018: 0.0040x 2019: 0.0043x a. What is the trend analysis for that Market to Book Ratio and why it is increasing and decreasing?
The scatter chart in the following figure was created using sample data for profits and market capitalizations from a sample of firms in the Fortune 500. a. Discuss what the scatter chart indicates about the relationship between profits and market capitalization? b. The data used to produce this are contained in the file Fortune500. Calculate the covariance between profits and market capitalization. Discuss what the covariance indicates about the relationship between profits and market capitalization? c. Calculate the correlation coefficient between profits and market capitalization. What does the correlations coefficient indicate about the relationship between profits and market capitalization?
The file Fortune500 contains data for profits and market capitalizations from a recent sample of firms in the Fortune 500 a. Prepare a scatter diagram to show the relationship between the variables Market Capitalization and Profit in which Market Capitalization is on the vertical axis and Profit is on the horizontal axis. Comment on any relationship between the variables. b. Create a trendline for the relationship between Market Capitalization and Profit. What does the trendline indicate about this relationship?
he following data represents the annual sales of a Digitech Automation products SAOG. Year 2014 2015 2016 2017 2018 Sales (in Millions) OMR 380 440 520 396 514 Use method of least squares to calculate the trend values and the forecast for the future period. Which of the following is the annual sales forecast for the year 2019 using least squares method? a. 539.6 Million OMR b. 584.4 Million OMR c. 606.8 Million OMR d. 562 Million OMR
Category of industry is real estate. The analysis of Quick Ratio is as follows: 2015: 2.78x 2016: 2.02x 2017: 2.35x 2018: 0.12x 2019: 0.26x a. What is the trend analysis for that Quick Ratio and why it is increasing and decreasing? b. Compare the ratio with the industry average.
Year U.S. Gov’t T-Bills U.K. Common Stocks 2015 0.063 0.150 2016 0.081 0.043 2017 0.076 0.374 2018 0.090 0.192 2019 0.085 0.106 a. Compute the geometric mean rate of return for each of these investments and compare the arithmetic mean return and geometric mean return for each investment and discuss the difference between mean returns as related to the standard deviation of each series.
Which two indices had the highest correlation between them during the 2014-2018 period? Multiple Choice S&P and DJIA S&P and Russell 2000 DJIA and Russell 2000 S&P and NASDAQ 100 NASDAQ 100 and DJIA

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