Question: Question 2 (20%): We use Least Squares to estimate regression models (e.g., simple linear regression model, multiple linear regression model), while we use Maximum Likelihood

 Question 2 (20\%): We use Least Squares to estimate regression models

Question 2 (20\%): We use Least Squares to estimate regression models (e.g., simple linear regression model, multiple linear regression model), while we use Maximum Likelihood to estimate ARCH/GARCH models. Explain how these two estimation methods (Least Squares and Maximum Likelihood) are used to optimize the models. Your answer should include the following points: (a) explain how Least Squares are used to estimate regression models, and how Maximum Likelihood is used to estimate ARCH/GARCH models. (b) Based on these two estimation methods, discuss the role of the estimation method in optimization. (Word limit: 400 words, excluding graphs, equations, formulas, and references)

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