Chapter 64
Using the lognormal random variable to model stock prices
Questions answered in this chapter:
What is a lognormal random variable?
Is there a reason stock prices might follow a lognormal random variable?
How can I model the future price of any stock as a lognormal random variable?
How can I compute the probability that Microsoft’s stock price will exceed $130 six months from now?
How can I compute the probability that in six months, Microsoft stock will sell for $90 or less?
How can I compute the median price of Microsoft stock in six months?
Many people are interested in modeling the future price of a stock, a commodity such as oil or wheat, or a future exchange rate. For the last 40 years, the lognormal random variable has been ...
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