Explain market equilibrium under two fund money separation
Answers
Answer:
Explanation:
Two-Fund Separation Theorem. A theory stating that under conditions in which all investors borrow and lend at the riskless rate, all investors will either choose to possess a risk-free portfolio or the market portfolio. See also: Markowitz portfolio theory.
Equilibrium is a state in which changes in the system and surroundings are not visible. In chemical reactions, the reactants undergo reversible reactions in which their energy decreases until it reaches a state of low energy where the rate of the forward reaction equals the rate of the backward reaction.
What is equilibrium?
plural equilibriums or equilibria - kW- li- br-, e- 1a: a state of intellectual or emotional equilibrium: poise attempting to regain his equilibrium. b: the process of balancing opposing or divergent influences or elements.
The theorem of the Two-Fund Separation A theory states that if all investors borrow and lend at the riskless rate, all investors will choose between a risk-free portfolio and a market portfolio. Also, see Markowitz's portfolio theory.
To learn more about equilibrium
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