You are a risk manager at a big corporation. How can you update the volatility estimate for

an asset when the closing price yesterday was $$375$ and the estimated daily volatility was

$1\mathrm{.}2\%?$ Today$$s closing price is $$371.$ You need to consider the following two methods for

updating the volatility estimate.

$($a$)$ The EWMA model with $\backslash$lambda $=0\mathrm{.}95,$

$($b$)$ The GARCH $(1,1)$ model with $\backslash$omega $=0\mathrm{.}000003,\backslash$alpha $=0\mathrm{.}05,$ and $\backslash$beta $=0\mathrm{.}95.$

$($Round all workings and calculations to eight decimal places$)$