Question: A time series model is considered to predict the daily closing stock price for the stock ABC from November 1, 2021 to December 8,

A time series model is considered to predict the daily closing stock price for the stock ABC from November 1, 2021 to December 8, 2021. The two plots below provide the Autocorrelations (ACF) and Partial Autocorrelations (PACF) plots for various lags. 9 2 S V 1.0 05 30 0 Autocorrelations Lag I Partial Autocorrelations 10 Lag 10 T 1 15 15 (a). Based on the ACF and PACF plots, it is reasonable to conclude that AR(1) model is a reasonable model for the stock price of ABC? Justify your answer. (b). Assuming that an AR(1) model is the correct model for the stock price of ABC, estimate the closing stock price for the stock ABC on December 9, 2021 and December 10, 2021. Show all your work. Assume that the closing stock price for the stock ABC on December 8, 2021 is $75.25.

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Answer a Based on the ACF and PACF plots provided it is reasonable to conclude that an AR1 model is a reasonable model for the stock price of ABC In t... View full answer

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