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Separation theorem

Definition:

Theory that the value of an investment to an individual is not dependent on consumption preferences. That is, investors will want to accept or reject the same investment projects by using the NPV rule, regardless of personal preference.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Noisy Chaos

A chaotic dynamical system with either observational or system noise added. See: Chaos, Dynamical Systems, Observational Noise, System Noise.

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