Re: CAPM_diversification(positively correlated stock)

Posted by kangkan on Jun 19, 2014; 5:58pm
URL: http://discussion-forum.276.s1.nabble.com/CAPM-diversification-positively-correlated-stock-tp7593095p7593116.html

@vandita..my topic is compensation for people displaced by eviction.

Can some one help with this-

I have the option of working in 3 markets- Market 1- with cosntant wage rate =w

market 2 - wage rate is normal variable with mean 10 and vriance 100

market 3-wage rate is a normal variable with mean 5 andd variance 50

the correlation coefficient between wage in mkt 2 and 3 is 0.2

i have 1 hour to work .

i allocate x fraction to mkt 2 and y fraction to mkt 3 and remaining (1-x-y) to mkt 1.

I need to find the PDF of the wage earnings

I believe it will involve bivariate normal distribution,but i cant figure out how to to procceed.

thanks :)