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QUESTION 4 The exponentially smoothed volatility estimate EWMA 0; = 10-2 + (1 - 1)r?-1...

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QUESTION 4 The exponentially smoothed volatility estimate EWMA 0; = 10-2 + (1 - 1)r?-1 is calculated with smoothing parameters lambda=.94. A. Is the process stable? What is the long run volatility forecast? B. Will volatility predictions be higher after negative returns than after similar positive returns? QUESTION 4 The exponentially smoothed volatility estimate EWMA 0; = 10-2 + (1 - 1)r?-1 is calculated with smoothing parameters lambda=.94. A. Is the process stable? What is the long run volatility forecast? B. Will volatility predictions be higher after negative returns than after similar positive returns

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