1. The CEO of JP Morgan analyzed the monthly returns data on exchange rates between Japanese Yen and US Dollars for the past 24 months and found the first three autocorrelation coefficients to be 0.75, 0.45 and 0.10 respectively (i.e. r1 = 0.75, r2 = 0.45 and r3 = 0.10). Based on his findings, he believes that the returns can be predicted using lagged data. 
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3. (a) Set up a hypothesis and test for the significance of ρ1 at 95% confidence level (i.e. H0 : ρ1 = 0). What is your conclusion? 
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5. (b) Set up a joint hypothesis to test H0 : ρ1 = ρ2 = ρ3 = 0. What is your conclusion on the hypothesis? 
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7. (c) Based on your findings, what are your suggestions to the CEO in terms of predictability of the exchange rate?