The Separation Principle States That an Investor Will

question 58

Multiple Choice

The separation principle states that an investor will:

• A)choose any efficient portfolio and invest some amount in the riskless asset to generate the
• Expected return.
• B)choose an efficient portfolio based on individual risk tolerance or utility.
• C)never choose to invest in the riskless asset because the expected return on the riskless
• Asset is lower over time.
• D)invest only in the riskless asset and tangency portfolio choosing the weights based on
• Individual risk tolerance.
• E)All of the above.

---

Definitions:

Disabilities

Conditions that impair, restrict, or limit an individual’s ability to perform certain activities compared to the majority of the population.

Isolation

The experience of being separated from others, which can be physical or emotional, often leading to feelings of loneliness and sadness.

Depression

A psychological condition marked by a continuous low mood or lack of pleasure in things, resulting in considerable disruption to everyday functioning.

Employment Rate

The percentage of the labor force that is employed, often used as an indicator of the economic health of a region.