1. (a) Recall the Fisher separation theorem and the conditions under which it holds. Explain the...

 

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1. (a) Recall the Fisher separation theorem and the conditions under which it holds. Explain the intuition of the result. It is possible to use graphs. [10 points] (b) Discuss the implications of the Fisher separation theorem for project evaluation and the organisation of the firm. It is possible to use graphs. [5 points] (c) Explain whether the theorem continues to hold, and how welfare is affected, if we consider the following alternative assumptions. It is recommended to use graphs. i. Agents cannot borrow and lend at the same rate (all else equal). [5 points] ii. There is a cap on how much agents can borrow (all else equal). [5 points] 1. (a) Recall the Fisher separation theorem and the conditions under which it holds. Explain the intuition of the result. It is possible to use graphs. [10 points] (b) Discuss the implications of the Fisher separation theorem for project evaluation and the organisation of the firm. It is possible to use graphs. [5 points] (c) Explain whether the theorem continues to hold, and how welfare is affected, if we consider the following alternative assumptions. It is recommended to use graphs. i. Agents cannot borrow and lend at the same rate (all else equal). [5 points] ii. There is a cap on how much agents can borrow (all else equal). [5 points]

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1a Fishers Separation Theorem The objective or goal of any company is to increase the va... View the full answer