In his theory of money, James Tobin did not agree with which of the following inferences/ assumptions…

In his portfolio balance approach to liquidity preference ('Liquidity Preference as Behavior Towards Risk', 1958), James Tobin disagreed with two key features of Lord Keynes's speculative demand for money: 1. Statement I (Elasticity of expectations of future interest rates): Keynes assumed that each individual holds an inelastic, certain expectation of a 'normal' future interest rate toward which rates will return, whereas Tobin modelled investors as facing uncertainty (risk) around expected capital gains or losses. 2. Statement II (Individuals hold either money or bonds): Keynes's deterministic expectation implied an unrealistic 'all-or-nothing' corner solution in which an individual holds either 100% cash or 100% bonds, whereas Tobin showed that risk-averse individuals diversify their portfolios and hold both money and bonds simultaneously. Therefore, Both I and II are correct.