c$)$ The Fama$-$French five factor model extends their three$-$factor model by adding two factors. One of them is $$Profitability$$ factor, motivated by empirical evidence that profitable firms generate higher returns than unprofitable firms.

i$.$ What is the efficient market hypothesis? Explain.

ii$.$ If the market is efficient, the difference in returns between firms of high and low profitability must be explained by extra risk that investors are taking from investing in profitable firms. What do you think is the extra risk? Discuss.