Which One of These Best Describes Steps of the Separation

question 95

Multiple Choice

Which one of these best describes steps of the separation principle?

• A)Determine the beta that best fits an investor's risk tolerance level and then determine which assets can be combined to create a portfolio that matches that beta
• B)Determine the tangency point between the risk-free rate and the efficient set of risky assets and determine how to combine the tangency point portfolio with risk-free assets to match the investor's risk tolerance level
• C)Determine the appropriate beta for an individual investor and then determine the most efficient set of risky assets that falls below that beta level
• D)From a pool of assets determine which pairs of assets have the lowest covariances and then determine how to combine these pairs into a portfolio that matches the investor's preferred beta
• E)Determine an investor's risk tolerance level and then determine which portfolio rate of return best fits that level of risk tolerance

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Definitions:

Outside Investment

Capital that comes from sources external to a business or entrepreneur, such as angel investors, venture capitalists, or financial institutions, to support growth or startup.

Social Impact

The effect of an organization's actions on the well-being of the community, society, or environment.

Social Venture Capital

A form of investment funding that is provided to companies or organizations aiming to offer social benefits, aside from financial returns.

Timmons Model

A framework for understanding and evaluating the entrepreneurship process, emphasizing opportunity, resources, and team as key elements.