Use the selected firm and return series from Assignment 1] REQUIREMENTS Part 1. For each of the series: (a)Perform the ADF and KPSS tests of stationarity in EViews, clearly stating your hypotheses. Comment on your results in line with relevant financial theory.[10 marks] (b)Estimate the best fitting ARMA/ARIMA model, following the Box-Jenkins methodology. Assess the adequacy of your results and formulate appropriate diagnostic procedures. Produce dynamic “out-of-sample” forecasts for the returns and discuss your findings about their accuracy. [30 marks] (c)Your boss suggests using ARCH(1) process to model the returns volatility. You disagree and wish to convince your boss that a GARC(1,1) process is better. Estimate both models and try to convince your boss about the preferability of the model you are proposing.[20 marks] Part 2 (Choose only one (1) question from this section) Estimate a vector autoregressive model (VAR) for your chosen stock, the market portfolio, the consumer price index and the UK-US exchange rate. Estimate the granger causality and the impulse response functions and comment on the results. (Use datafile_var) or Pair the FTSE-100 index with any other two (2) country stock indices (posted on Blackboard) and test for cointegration among the pairs of variables by applying the Engle-Granger (EG) approach. •Provide a clear definition of the techniques/econometric tests used and WHY they are used.