Question: Why is the separation principle still valid in a world with (a) Nonmarketable assets? (b) A nonstochastic risk-free rate?

Why is the separation principle still valid in a world with
(a) Nonmarketable assets?
(b) A nonstochastic risk-free rate?

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a Given that some assets are nonmarketable the equilibrium pricing equation is given by Mayers 1972 ... View full answer

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