Two-fund separation theorem

Two-fund separation theorem

The theoretical result that all investors will hold a combination of the risk-free asset and the market portfolio.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved