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30) Please list at least one known source of risk that is not included in CAPM. 3 points 31) You are an analyst for a

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30) Please list at least one known source of risk that is not included in CAPM. 3 points 31) You are an analyst for a stock valuation firm and are tasked with evaluating the Really Awesome Cookies company (RAC). Through your analysis of the financial statements as well as your extensive knowledge of the firm's future prospects you determine that the expected return for RAC stock is 18% over the next year. Alternatively, you observe that, according to CAPM, the required rate of return for the riskiness of RAC is 15%. Judging only by the information for RAC presented here, is the market efficient? 3 points 32) Generally speaking, why or why not do active managers beat the market? 3 points 33) Between debt capital and equity capital, if one is less expensive than the other, can a firm simply include more of the cheaper capital in their capital structure and as a result lower their cost of capital? 3 points 34) In relation to your response for question 33, why or why not? 3 points 30) Please list at least one known source of risk that is not included in CAPM. 3 points 31) You are an analyst for a stock valuation firm and are tasked with evaluating the Really Awesome Cookies company (RAC). Through your analysis of the financial statements as well as your extensive knowledge of the firm's future prospects you determine that the expected return for RAC stock is 18% over the next year. Alternatively, you observe that, according to CAPM, the required rate of return for the riskiness of RAC is 15%. Judging only by the information for RAC presented here, is the market efficient? 3 points 32) Generally speaking, why or why not do active managers beat the market? 3 points 33) Between debt capital and equity capital, if one is less expensive than the other, can a firm simply include more of the cheaper capital in their capital structure and as a result lower their cost of capital? 3 points 34) In relation to your response for question 33, why or why not? 3 points

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