Occupation-level income shocks and asset returns: their covariance and implications for portfolio choice
Abstract: This paper develops and applies a simple graphical approach to portfolio selection that accounts for covariance between asset returns and an investor's labor income. Our graphical approach easily handles income shocks that are partly hedgeable, multiple risky assets, multiple risky assets, many periods, and life cycle considerations.
File format is application/pdf
Description: Full text
Provider: Federal Reserve Bank of Boston
Part of Series: Working Papers
Publication Date: 2013-10-24
Pages: 58 pages