Under the separation theorem, investors should:
A) hold the same portfolio of risky assets.
B) have different optimal portfolios of risky assets.
C) hold the same percentage of their portfolio in risk-free securities.
D) borrow at the risk-free rate to achieve a lower risk portfolio.

Question

Quizplus · Accepted Answer

The separation theorem states that all investors will hold the same portfolio of risky assets, known as the market portfolio, and will combine it with risk-free assets according to their risk preferences.

Under the Separation Theorem, Investors Should