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Definition of 'Log-Normal Distribution'
A statistical distribution of random variables which have a normally distributed logarithm. Log-normal distributions can model a random variable X where log(X) is normally distributed.
These distributions, under multiplication and division, are self-replicating. That is to say, multiplying or dividing log-normal random variables will result in log-normal distributions.
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Investopedia explains 'Log-Normal Distribution'
For example, log-normal distributions can model certain instances, such as the change in price distribution of a stock, or commodity positions. This is because the time series creates random variables. By taking the natural log of each of the random variables, the resulting set of numbers will be log-normally distributed. Other uses include survival rates of cancer patients or failure rates in product tests.
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Search results for 'Log-Normal Distribution'
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http://www.investopedia.com/articles/06/probabilitydistribution.asp
... Lognormal The lognormal distribution is very important in finance because many of
the most popular models assume that stock prices are distributed lognormally. ...
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http://www.investopedia.com/articles/07/montecarlo.asp
... Instead, it will tend toward a lognormal distribution: a sharp drop off to the left
of mean and a highly skewed "long tail" to the right of the mean. ...
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http://www.investopedia.com/articles/07/monte_carlo_intro.asp
... (For related reading, see The Uses And Limits Of Volatility.) Lognormal Distribution -
Continuous distribution specified by mean and standard deviation. ...
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http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/confidence-intervals.asp
... 2.16 Common Probability Distributions; 2.17 Common Probability Distribution
Calculations; 2.18 Common Probability Distribution Properties; ...
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http://www.investopedia.com/university/option-greeks/greeks2.asp
... Of course, underlying this interpretation is the assumption that prices follow a
log-normal distribution (essentially daily price changes are merely a coin ...
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http://www.investopedia.com/articles/04/021804.asp
... Technically, the final price outcomes are lognormal (meaning that if the x-axis
were converted to natural log of x, the distribution would look more normal). ...
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http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/sampling-estimation.asp
... 2.16 Common Probability Distributions; 2.17 Common Probability Distribution
Calculations; 2.18 Common Probability Distribution Properties; ...
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