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Efficient Set Mathematics, the Separation Theorem, and Farm Operating Decisions

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  • Turvey, Calum Greig
  • Kimble, John W.
  • Baker, Timothy G.

Abstract

Efficient set mathematics is used to derive simple formulae for E-V efficient portfolio selection in agriculture. These formulae are used to illustrate the separation theorem when riskless cash rented land is combined with a farm portfolio. A simple example utilizing the formulae and illustrating the separation theorem is presented.

Suggested Citation

  • Turvey, Calum Greig & Kimble, John W. & Baker, Timothy G., 1987. "Efficient Set Mathematics, the Separation Theorem, and Farm Operating Decisions," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270094, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea87:270094
    DOI: 10.22004/ag.econ.270094
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    References listed on IDEAS

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    1. S. R. Johnson, 1967. "A Re-examination of the Farm Diversification Problem," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 49(3), pages 610-621.
    2. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    3. Roll, Richard, 1977. "A critique of the asset pricing theory's tests Part I: On past and potential testability of the theory," Journal of Financial Economics, Elsevier, vol. 4(2), pages 129-176, March.
    4. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    5. C. G. Turvey & H. C. Driver, 1986. "Econanic Analysis and Properties of the Risk Aversion Coefficient in Constrained Mathematical Optimization," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 34(1), pages 125-137, March.
    6. Robert A. Collins & Peter J. Barry, 1986. "Risk Analysis with Single-Index Portfolio Models: An Application to Farm Planning," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 152-161.
    7. Black, Fischer, 1972. "Capital Market Equilibrium with Restricted Borrowing," The Journal of Business, University of Chicago Press, vol. 45(3), pages 444-455, July.
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    Cited by:

    1. Mumey, G.A. & Bauer, L. & Boyda, A., 1988. "An Estimate of Risk and Returns From Cropping Alternatives," Project Report Series 232065, University of Alberta, Department of Resource Economics and Environmental Sociology.

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