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solution.

Using the same Bonuses data above, a

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a. Fit a third-order autoregressive model to the bonuses paid and test for the significance of the third-order autoregressive parameter (use x = 0.05).
b. If necessary, fit a second-order autoregressive model to the bonuses paid and test for the significance of the second-order autoregressive parameter (use a = 0.05).
C. If necessary, fit a first-order autoregressive model to the bonuses paid and test for the significance of the first-order autoregressive parameter (use x = 0.05).
d. Using the most appropriate model, forecast the bonuses paid in 2015 and 2016.
e. Plot your actual and predicted bonuses (on the same graph) using your model selected in part d above. This requires that you have the predicted bonuses for each year (starting in 2010) using your selected model in part d.

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