The Separation Principle States That an Investor Will

question 37

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.

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Definitions:

Strive For Superiority

The motivation to overcome perceived weaknesses and assert one's competence or excellence.

Get Along

The ability to relate or interact harmoniously with others, often considered an important aspect of social and emotional intelligence.

Independent

Free from outside control; not depending on another's authority.

Avoiding Style

A conflict resolution approach where individuals deliberately evade addressing an issue or engaging in confrontation.