The parameters of a generalized autoregressive conditional heteroskedastic (GARCH)(1,1) model are = 0.00001, = 0. 2, and = 0.97. If daily volatility is estimated to be 3%, and todays stock market return is 1.6%, what is the new estimate of the standard deviation?

1. 2.98%.

2. 3.89%.

3. 17.16%.

4. 0.09%.