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:

Endocrine Glands

Glands of the endocrine system that secrete hormones directly into the bloodstream to regulate various bodily functions.

Hormones

Chemical substances released into the bloodstream by the endocrine glands.

Gonads

The sex glands.

Gender-Inappropriate Behavior

Actions or behaviors that deviate from the societal norms and expectations associated with a person's assigned gender at birth.