GARCH model is ( sigma_t)^2 = omega +alpha* (u_(t-1)^2 +beta*(sigma_(t-1))^2

omega=0.00000005 not 0.00005

A risk manager estimates daily variance of using a GARCH model on daily returns ut: 07 = w + au{-1 + Box-1, with w = 0.00005; a = 0.04; = 0.94. The long-run annualized volatility is approximately a) 13.54% b) 7.94% c) 72.72% d) 25.00%