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A company uses an EWMA model for forecasting volatility. It decides to change the parameter (lambda) in the model from 0.95 to 0.90. As a

A company uses an EWMA model for forecasting volatility. It decides to change the parameter (lambda) in the model from 0.95 to 0.90. As a result of this change volatilities calculated with the EWMA model will be more volatile that is they will bounce around more.

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