You must answer ONE question in this section 1. Consider the process {Xt} satisfying the recursion Xt=0.5Xt1+0.5Xt2+t where {t} is a sequence of independent random variables with mean zero and unit variance. Show that {Xt} is an ARIMA (p,d,q) process, by checking that dXt is a covariance stationary and invertible ARMA processes, for some d=0,1,2, Specify p,d and q. [50%] 2. Consider a covariance stationary GARCH(1,1) process for an excess return series {rt}, where rt+1=t+1zt+1t+12=+rt2+t2 where {zt} is a sequence of independent standard normal random variables, >0 and >0,>0,+0 and >0,>0,+