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4. The most recent estimate of the daily volatility of an asset is 4.0% and the price of the asset at the close of trading

4. The most recent estimate of the daily volatility of an asset is 4.0% and the price of the asset at the close of trading yesterday was $50.00. The lambda parameter, 1, in the EWMA model is 0.790. Suppose that the price of the asset at the close of trading today is $49.00. If we use a simple daily return rather than a log return, which is nearest to the volatility updated by the EWMA model? A. 3.6720% B. 3.9530% C. 4.1060% D. 4.7825%

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