(1)Solve + = and comment on whether the process is stable

(2)For = ² + ² + ₁₂,

² /₁₂ = ² /₂₁

(3)Assuming _t is a zero mean random error term, the random walk process _t = _t-1 + _t

a-No particular solution or no long-term equilibrium value

b-Has a longterm equilibrium value equal to 0

c-Has a longterm equilibrium value equal to 1

d-Neither of the previous is true

4-Solve _t = + . _t-1and comment on whether the process is stable

5-Assume an ordinary share pays a yearly dividend of 0.2 indefinitely. If the capitalisation rate is 4% and the predicted rate of growth is 2% the fair price of the share is