Reviewing knowledge of volatility and correlation

Suppose you are given a time series of risk-factor returns. You carry out the exploratory procedures and tests described in this chapter. Which of the following is a true statement?

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Possible Answers

A significant Ljung-Box test implies that the data are heavier-tailed than normal.
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An insignificant Ljung-Box implies that the time series can be assumed to be independent.
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A Q-Q plot of the waiting times between the most extreme values against a normal distribution can reveal evidence of volatility.
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When volatility is present in a time series we can predict the magnitude of future returns.
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When volatility is present in a time series we can predict the direction of future returns.
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