Fisher's separation theorem means that:

Question

Quizplus · Accepted Answer

Fisher's separation theorem states that a company's investment decisions should be made based on maximizing shareholder wealth independent of financing decisions. This means that a company should invest up to the point where the rate of return on the marginal unit of investment equals the market interest rate, known as the internal rate of return. Therefore, choice (C) is correct, while choices (A) and (B) are incorrect. Choice (D) is also incorrect as one of the options given is correct.

Fisher's Separation Theorem Means That