Interview Question: Grand Arch

Sample Question #11 (econometrics – time series)
What’s a GARCH model? Why is it an important/useful model? When would you use the GARCH model?
Can you write down its general formulation? What does the GARCH model say in plain English? What does it "try" to achieve?
How do you determine the order of the model? How do you estimate the model in practice?
Tough follow-up question: how do you implement a GARCH model in Excel?
(Comment: wow, a lot of questions today under one banner! GARCH questions are, unfortunately IMHO, extremely popular with quant interviewers. It seems to me that most people misunderstand GARCH but still pretend they know the model. How sad.)
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