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Basic Question 6 of 7
Which of the following statements is true?
B. The lognormal distribution is used widely in the BSOPM.
C. The lognormal distribution is defined by its parameters.
A. The lognormal distribution has a long left tail.
B. The lognormal distribution is used widely in the BSOPM.
C. The lognormal distribution is defined by its parameters.
User Contributed Comments 3
| User | Comment |
|---|---|
| david22 | Just because the parameters of the lognormal are not its mean and variance does not mean that they do not define the distribution. |
| bobert | That is like saying, just because two random people aren't your parents does not mean they didn't give birth to you.... It is impossible to be the biological child of people who are not your biological parents. |
| ascruggs92 | Except for that the parameters of a Lognormal are its mean and variance. |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices when using continuously compounded asset returns
CFA® 2024 Level I Curriculum, Volume 1, Module 6.