The following questions require R. On Compass is the R script les econ4901ab6_Hint.r. The le contains hints for completing this R exercises. Copy and paste the relevant statistical results and graphs into a MS Word document (or your favorite word processor) while you work, and add any comments and answer all questions in this document. Start MS Word and open a blank document. You will save your work in this document. In this lab, you will analyze continuously compounded monthly return data on the S&P 500 index ("GSPC) and Microsoft stock (MSFT). I encour- age you to go to nance.yahoo.com and research these assets. The script le econ4901ab6_Hint.r walks you through all of the computations for the lab. You will also need to install several packages. 1. Do the following exercises. (a) Make time plots of the return data from 2000-01-03 to 2014-02- 21. Comment on any stylized fact on returns (as we discussed in class) suggested by the plots. (b) For each return series, make a four panel plot containing a return plot, acf, density plot and normal QQplot. Do the return series look normally distributed? (c) Testing normality of each return distribution using J arque-Bera test statistics. (d) Now estimate GARCH(1,1) model parameters (the same model as in Review Questions (c)) and report the estimated values of a1 + 61. How do you intertpret these results? (e) For parameter a1 and 61 compute 95% and (asymptotic) con- dence intervals. (f) Test Ho : a1 : 0 with 95% condence level for each returns. Do the test H0 : 61 = 1 as well