ARCH formula question about mu

What does mu stand for in the ARCH formula?

Twelfth letter of the Greek alphabet?

Ha! It isn’t the Error term; that is represented by E. Hmm…

I’ll look up the ARCH formula when I get a few minutes.

We used mu for the mean of a distribution in stats class back in the day. :older_man:

When Greek was the lingua franca?


After working a few more ARCH Kaplan problems, it appears that Mu is completely ignored as a factor to the final answer…

I looked through the curriculum and didn’t see mu in any of the ARCH formulae.

Where do you think that you saw it?

This scan is from my Kaplan QuickSheet; pardon my handwritten notes.

Isn’t that Mu on the far right of the ARCH formula?

It is.

But you’re looking at Schweser’s notes. My comment was about the curriculum, which reads, in part:

\hat\epsilon_t^2 = a_0 + a_1\hat\epsilon_{t-1}^2 + u_t

Schweser changed u to \mu.

u_t is the error term.

Such are the pitfalls of using third-party materials.

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Thank you as always.

My pleasure.

For the record, as much as it keeps me in business, I hate it when prep providers make mistakes. It hurts you candidates.

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A funny mu story:

My niece was taking stats for non-stats majors. She calls me in a panic saying there’s something weird in her course manual with number sign and some other :poop:. It turns out the TA was trying to put the Greek letter mu into the course notes and messed up the code! :laughing: