Your instructor conducts equity volatility research using a generalized autoregressive conditional heteroscedasticity (GARCH) model. The first two equations in one of his research papers are: Ries=y+By Rm.ty +Ety Ey~N(0, hey) huty=You+Yyh-15 +Y2yr-1.3 (Equation # 2) f where Rity and Rey are the daily stock returns on firm at day for year y and the value weighted US market return on day for year y, respectively. Ey is the residual firm-specific component of (abnormal) returns, while he represents conditional variance. Which FIN 3200 equation is the best substitute for the equation pair provided above? Var(R) = o = E= (P (E(r;) E(R))) r = g + Po = P-Po+C Po CAPM: R= Rrf + B(Rm - Rrf) PVA, = [1 (1+0) r-g Ct NPV = PVinflows - PVoutflows = =0(1+r) (Equation #1)