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Suppose That the British Stock Market Is Integrated with the Rest

Question 77

Multiple Choice

Suppose that the British stock market is integrated with the rest of the world and Stansfield Company has made its shares tradable internationally via cross-listing on the NYSE.Using the CAPM and a risk-free rate of 5 percent,estimate the equity cost of capital for Stansfield. Correlation Coefficients
Stansfield England World SD(%) R\mathcal { R } %
 Stansfield 1.000.900.6020? England 1.000.801814 World 1.001512\begin{array} { l c c l c c } \text { Stansfield } & 1.00 & 0.90 & 0.60 & 20 & ? \\\text { England } & & 1.00 & 0.80 & 18 & 14 \\\text { World } & & & 1.00 & 15 & 12\end{array}


A) 12 percent
B) 10.60 percent
C) 6.60 percent
D) None of the options

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