The following statement, that the value of an investment to an individual is not dependent on consumption preferences, is called the:
A) marginal rate of substitution.
B) separation theorem.
C) value additivity principle.
D) investor's dilemma.

Question

Quizplus · Accepted Answer

The separation theorem, also known as the Fisher separation theorem, posits that the investment decision is separate from the consumption preferences of the investors. This means that the value of an investment can be determined independently of the individual's consumption preferences.

The Following Statement, That the Value of an Investment to an Individual