--%>

Add random numbers, find normal, multiply, is it important

While you have some random numbers for adding, get normal them then multiply them, is it important in finance?

E

Expert

Verified

This is significant in finance because a stock price after a long period can be thought of like its value on several starting day multiplied by many random numbers, each showing a random return. Therefore, whatever the distribution of returns is, the logarithm of the certain stock price will be normally distributed. We tense to suppose that equity returns are normally distributed, and equities, equivalently themselves are lognormally distributed.

   Related Questions in Financial Management

  • Q : $-£ currency swap Assume Morgan

    Assume Morgan Guaranty, Ltd. is quoting swap rates as follows: 7.75 - 8.10 percent annually against six-month dollar LIBOR for dollars and 11.25 - 11.65 percent annually against six-month dollar LIBOR for British pound sterling. At what rates will Morgan Gua

  • Q : State the term Option Adjusted Spread

    State the term Option Adjusted Spread? Answer: The OAS stands for Option Adjusted Spread is the constant spread added to a forward or a yield curve to match the mark

  • Q : Illustrates the way to optimize hedge

    Illustrates the way to optimize hedge.

  • Q : Question related to FRA Normal 0 false

    Normal 0 false false

  • Q : How is arbitrage argument estimated How

    How is arbitrage argument estimated?

  • Q : Time value of money You are trying to

    You are trying to save to buy a new $150,000 Ferrari. You have $40,000 today that can be invested at your bank. The bank pays 5.5% annual interest rate on its accounts. How long will it be before you have enough to buy the car?

  • Q : Ways to make the financial trades on an

    What are the ways to make the financial trades on an organized exchange?

  • Q : What is Vega Hedging What is Vega

    What is Vega Hedging?

  • Q : Invest through investors the lion's

    What the reason behind invest through investors the lion's share of their funds in domestic securities?Investors invest a lot in their domestic securities since there are significant barriers to investing overseas. The barriers may comprise exce

  • Q : Suggestion to stop the recurrence of

    In integrated world financial market, a financial crisis in a country can be quickly transmitted to other countries, causing global crisis. What sort of measures would you suggest to stop the recurrence of Asia-type crisis?

    Discover Q & A

    Leading Solution Library
    Avail More Than 1413994 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1929938
    Asked

    3,689

    Active Tutors

    1413994

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.