1.Consider the monthly log returns of CRSP equal-weighted index from January 1962 to December 1999 for 456 observations. You may obtain the data from the filehw1.txt.(a)Plot the time series.(b)Build...

1.Consider the monthly log returns of CRSP equal-weighted index from January 1962 to December 1999 for 456 observations. You may obtain the data from the filehw1.txt.(a)Plot the time series.(b)Build an AR model for the series and check the fitted model.(c)Build an MA model for the series and check the fitted model.(d)Compute 1-and 2-step-ahead forecasts of the AR and MA models built in theprevious two questions.(e)Compare the fitted AR and MA models.(f)Use diagnostic tools to identify the possible order(s) of ARMA model(s) that mostlikely describes the series.(g)Use some form of search to identify what form of ARMA(p,q) modelbestdescribes the log index returns.(h)Write out the best model.


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