Explain Fisher’s Separation Theorem and why it is important for both consumers and corporations.

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Rahul Sunny answered 1 year ago

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Inter-temporal Investment/Consumption a. Summarize Fisher’s separation theorem. b. Why is this theorem important to both investors and corporations? c. Why is the existence of a capital market important to the theorem? Illustrate this graphically in the two-period framework and show/explain how consumers will maximize utility. d. What are some of the assumptions that cause the theorem to hold?

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Explain Fisher’s Separation Theorem and why it is important for both consumers and corporations.

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