1. Suppose observations yt follow a linear trend + white noise stochastic process: yt = c + βt + ϵt ϵt ∼ W N(0, σ2 ) (a) Derive it’s unconditional mean. (b) Derive it’s unconditional variance function. (c) Derive it’s autocorrelation function. (d) Is yt covariance stationary ? Explain.

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