The separation property refers to the conclusion that
A) the determination of the best risky portfolio is objective, and the choice of the best complete portfolio is subjective.
B) the choice of the best complete portfolio is objective, and the determination of the best risky portfolio is objective.
C) the choice of inputs to be used to determine the efficient frontier is objective, and the choice of the best CAL is subjective.
D) the determination of the best CAL is objective, and the choice of the inputs to be used to determine the
E) investors are separate beings and will, therefore, have different preferences regarding the risk-return

Question

Quizplus · Accepted Answer

The determination of the optimal risky portfolio is purely technical and can be done by a manager. Thecomplete portfolio, which consists of the optimal risky portfolio and the risk-free asset, must be chosen by eachinvestor based on preferences.

The Separation Property Refers to the Conclusion That