Answer: A

The correct answer is A. This is an EWMA (Exponentially Weighted Moving Average) volatility calculation: - λ = 0.94 (decay factor) - Previous volatility σ_{n-1} = 0.015 - Return μ_{n-1} = (30.5 - 30)/30 = 0.016667 - Calculation: σ_t = √[(0.94)(0.015)^2 + (1-0.94)(0.016667)^2] = √[0.0002115 + 0.00001667] = √0.00022817 = 0.015105 = 1.5105% This demonstrates the EWMA volatility forecasting method where recent observations receive higher weight than older ones.

Author: LeetQuiz Editorial Team