Exercise

# Implement a basic GARCH model

In this exercise, you will get familiar with the Python `arch`

package, and use its functions such as `arch_model()`

to implement a GARCH(1,1) model.

First define a basic GARCH(1,1) model, then fit the model, review the model fitting summary, and plot the results.

The data to use S&P 500 price return data has been preloaded as `sp_data`

. Also the `arch`

package has been imported for you.

Instructions 1/2

**undefined XP**

- Define a GARCH(1,1) model
`basic_gm`

with`'constant'`

mean and`'normal'`

distribution of the residuals. - Fit the model
`basic_gm`

.