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The most recent estimate of the daily volatility of the U.S. dollar-sterling exchange rate is 0.6%, and the exchange rate at 4 p.m. yesterday was 1.5000. The parameter in the EWMA model is 0.9. Suppose that the exchange rate at 4 p.m. today proves to be 1.4950. How would the estimate of the daily volatility be updated?

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