Separation theorem is an economic theory that a company's investment decision can be separated from investors' personal preferences. The company's goal is to maximize the value, regardless of the owner's preference.

Therefore, managers' investment decisions should be separated from investors' market opportunities. Because of the existence of financial market, individuals can adjust cash inflows, consumption preferences and consumption opportunities, so the value of an investment is not affected by personal consumption preferences, that is, all investors will evaluate the same project and decide their choices according to the principle of value maximization, even though their consumption preferences are different.

Separation theorem is very important in financial management, which shows that the management of an enterprise does not have to consider the attitude of each shareholder to risk when making decisions. The price information of securities can be used to determine the rate of return required by investors, thus guiding the management to make decisions.

On the effective portfolio boundary of all venture portfolios, any two separation points represent two separated effective portfolios, and any other point on the effective portfolio boundary can be represented by the linear combination of effective portfolios represented by these two separation points.

Generally speaking, the optimal combination of investors' risk assets letters has nothing to do with investors' preference for risks and returns.