Degrees of freedom and conditional expectations

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Reference no: EM13108157

1. Show that if Z1 and Z2 are independent standard normal random variables, then for all ρ (correlation), Z1 and ρZ1+sqrt(1-ρ2)*Z2 are standard normal with correlation ρ.

2. Show that for all ρ and v, T1 = (Z1)/sqrt(X/v)and T2 = (Z2)/sqrt(X/v) have correlation ρ, where Z1and Z2 are standard normal with correlation ρ,  and X is independent of both Z1 and Z2 and has a Chi-Squared distribution. (for simplification use the fact that T1 and T2 both have the t distribution with v degrees of freedom and conditional expectations.)

(v=degrees of freedom)

Reference no: EM13108157

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