In GARCH model why we take assumption that returns are i.i.d.?how can we explain it to a layman?


closed as off-topic by chollida, Bob Jansen Oct 2 '15 at 16:47

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    $\begingroup$ I think this question probably belongs on stats.stackexchange.com $\endgroup$ – chollida Oct 2 '15 at 15:06
  • $\begingroup$ I'm voting to close this question as off-topic because I agree in principle but similar has already been asked, e.g. math.stackexchange.com/q/466927/31642 so migration will probably not appreciated by the receiving site. $\endgroup$ – Bob Jansen Oct 2 '15 at 16:47
  • $\begingroup$ I suggest we let the question stand, and suggest it be reworded. It sounds like the OP is asking why GARCH assumes i.i.d returns rather than asking for a layman's explanation of i.i.d. $\endgroup$ – AfterWorkGuinness Oct 5 '15 at 14:36

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