Question: The model for AMAZON stock prices has been found to be AR(1) with Xt = 0.99Xt-1 + a, where a is NID(0,46.8). Suppose X_bar =

The model for AMAZON stock prices has been found to be AR(1) with Xt = 0.99Xt-1 + a, where a is NID(0,46.8).

Suppose X_bar = 1200

(a)If yesterday's stock price was 1150, what is the best prediction of today's stock price?

(b)What is the 97.5% probability limits on this prediction?

(c)If today's stock price turns out to be 1210, what is the prediction error?

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