Separation property


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Separation property

The property that portfolio choice can be divided into two independent tasks: (1) Determination of the optimal risky portfolio, which is a purely mathematical problem, and (2) the personal choice of the best mix of the optimal risky portfolio and the risk-free asset, which depends on a person's degree of risk aversion.

Separation Property

In Markowitz portfolio theory, the ability of a portfolio manager to identify a client's needs by separating them into two separate duties. The first duty is to pick the risky securities that will have the highest return. This is a mathematical equation and can be accomplished easily. The second duty is to decide which securities meet individual clients' own desires for risk. Portfolio managers must discuss investment goals and risk averseness with clients in order to perform the second duty.
References in periodicals archive ?
Chromatography technique is of paramount importance in the field of biosciences owing to its bimolecular mixture separation property.
Figure 3 shows the extremely good separation property with baseline separation of nitrogen and methane at TCD 1.
Foveon X3 image sensors are the world's only direct image sensors, which capture red, green, and blue light at every pixel location, and are the first image sensors that leverage silicon's inherent color separation property.