The Separation Theorem States That

question 38

Multiple Choice

The separation theorem states that:

• A) systematic risk is separate from unsystematic risk.
• B) individual security risk is separate from portfolio risk.
• C) the investment decision is separate from the financing decision.
• D) the borrowing portfolio is separate from the lending portfolio.

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Definitions:

Demand Curve

A chart that displays the connection between a product's price and the amount consumers are willing to purchase.

Marginal Revenue

The additional income gained from selling one more unit of a product or service.

Marginal Costs

The increase in total production cost that comes from making or producing one additional unit.

Average Total Costs

The cost per unit of output, calculated by dividing the total cost by the quantity of output produced.