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Homework answers / question archive / Suppose the simple weekly return of a stock is independently and identically log-normally distributed with parameters μ = 0
Suppose the simple weekly return of a stock is independently and identically log-normally distributed with parameters μ = 0.2 and σ = 0.4. What is the probability that the price of the stock will be lower next week?
Select one:
A. 0.0952
B. None of these
C. 0.3085
D. 0.5000
E. 0.6915
Answer. C] 0.3085
Log normal distribution is also called Galton distribution or Galton's distribution. A continuous probability distribution of a random variable whose logarithm is normally distributed.
