The ____ theorem states that the optimal combination of risky assets for an investor can be determined without any knowledge of the investor;s preferences toward risk and return.
A) CAPM
B) nonsatiation
C) separation
D) Markowitz

Question

Quizplus · Accepted Answer

The separation theorem, also known as the mutual fund theorem, posits that the decision on the optimal combination of risky assets can be made independently of an investor's risk preferences. This theorem underlies the idea that investors can first decide on the best mix of risky assets (like picking a mutual fund) and then combine this with the risk-free asset based on their individual risk tolerance.

The ____ Theorem States That the Optimal Combination of Risky