Question: Inter-temporal Investment/Consumption a. Summarize Fishers separation theorem. b. Why is this theorem important to both investors and corporations? c. Why is the existence of a

Inter-temporal Investment/Consumption

a. Summarize Fishers 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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