Consider a Random Walk Model with the Following Equation

question 77

Essay

Consider a random walk model with the following equation: , where is a normally distributed random series with mean of 0 and standard deviation of 12.
-(A) Use Excel to generate a time series of 25 values using this random walk model with a starting value of 200.
(B) Conduct a runs test on the series you generated for (A). Is it random? Explain.
(C) Conduct a runs test on the differences between successive values for the series you generated for (A). Is it random? Explain.
(D) Use the time series you constructed in (A) to forecast the next observation.

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