1. Suppose that the simple return of a quarterly stock index takes the following form:

Rt = t 0.5t1 + 0.5t2, = 1

where {_t} is a white noise series with mean zero.

1. Is the simple return of the stock index a white noise process? Show all working.
2. b. Is the simple return of the stock index covariance-stationary? Is it weakly dependent?
3. c. What is the difference between a white noise process and a weakly dependent process? Discuss.
4. d. Compute the lag-1 and lag-2 autocorrelations of the return series. Show all working