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If Ut Refers to the Error Term at Time 'T

Question 7

Multiple Choice

If ut refers to the error term at time 't' and yt - 1 refers to the dependent variable at time 't - 1',for an AR(1) process to be homoskedastic,it is required that:


A) Var(ut|yt - 1) > Var(yt|yt-1) = σ2.
B) Var(ut|yt - 1) = Var(yt|yt-1) > σ2.
C) Var(ut|yt - 1) < Var(yt|yt-1) = σ2.
D) Var(ut|yt - 1) = Var(yt|yt-1) = σ2.

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