Answer: B one.

## Explanation Random walks are a special case of an autoregressive model of order one (AR(1)). **Key points:** - A random walk model is defined as: \( x_t = x_{t-1} + \varepsilon_t \) - This can be rewritten as: \( x_t - x_{t-1} = \varepsilon_t \) - This is equivalent to an AR(1) model where the coefficient on the lagged term is exactly 1 - In AR(1) notation: \( x_t = \phi x_{t-1} + \varepsilon_t \) where \( \phi = 1 \) Therefore, random walks are a specific instance of AR(1) models where the autoregressive coefficient equals 1.

Author: LeetQuiz Editorial Team