Suppose That the British Stock Market Is Segmented from the Rest

Multiple Choice

Suppose that the British stock market is segmented from the rest of the world.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(%) $\mathcal { R }$ %
$$\begin{array} { l c c l c c } \text { Stansfield } & 1.00 & 0.90 & 0.60 & 20 & ? \\\text { England } & & 1.00 & 0.80 & 18 & 14 \\\text { World } & & & 1.00 & 15 & 12\end{array}$$

A) 14 percent
B) 12 percent
C) 9 percent
D) none of the options