Chapter 72. Using the lognormal random variable to model stock prices
Questions answered in this chapter:
What is the 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 the Microsoft stock price will exceed $38 six months from now?
How can I compute the median price of Microsoft 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 past 40 years, the lognormal random variable has been the random variable most often used to model stock prices. In this chapter, you learn why the lognormal random ...
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