Q1. Derive the autocorrelation coefficients (k) for AR(2) (provide all details!) also draw histograms (up to k=10) for
a) a_1 = 0.8, a_2 = 0.1
b) a_1 = 1.0, a_2 = -0.5
Express qualitative difference among these 2 cases.
Q2. If a deposit outflow of $50 million occurs, which balance sheet would a bank rather have primarily or the following balance sheet? Why?