You have a friend who claims that because microsoft has a


1) You have a friend who claims that because Microsoft has a higher standard deviation than Exxon, it must have a higher cost of equity as well. Briefly explain why this is an incorrect statement.

2) You are currently looking for a new stock in which to invest. Through a friend of a friend, you hear that Evaporite Systems Inc. has just successfully completed testing on a new system to eliminate wastewater which will make all other systems obsolete, and have partnered with a major petroleum development company to bring it to market.   In the space below, describe under which form(s) of market efficiency it would be worth your time and effort to invest in this company, and under what form(s) of efficiency it would not be feasible. Why is this the case?

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Financial Management: You have a friend who claims that because microsoft has a
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