The Separation Principle States That an Investor Will

Multiple Choice

The separation principle states that an investor will:

A) choose any efficient portfolio and invest some amount in the riskless asset to generate the
Expected return.
B) choose an efficient portfolio based on individual risk tolerance or utility.
C) never choose to invest in the riskless asset because the expected return on the riskless
Asset is lower over time.
D) invest only in the riskless asset and tangency portfolio choosing the weights based on
Individual risk tolerance.
E) All of the above.