What are Implications of the normal distribution for Finance
What are Implications of the normal distribution for Finance?
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Similar argument could be applied to the daily changes during exchange rate rates, risk of default or interest rates. We get ourselves using the normal distribution rather naturally for various financial processes.As frequently with mathematical ‘laws’ there is the ‘legal’ small print, while the conditions under that the Central Limit Theorem applies.
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You have one hat containing normally distributed random numbers, with a mean of zero and a standard deviation of σ which is unknown. You draw N numbers φi from this hat. What is the ‘probability’ of drawing all of the numbers &ph
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