Mathematics Homework Solutions
#221935
Finance Math : Linear Property of Normal Random Variables, Log-normal Distribution and Log-Price
2. Linear property of normal random variables.
Suppose the price of stock A S1 is log-nromally distributed with parameter 4 and 0.1^2, That is, the log-price ln S1 is normally distributed with mean 4 and variance 0.1^2. What is the probability that the price of stock A is greater than 50?
The solution discusses the determination of the probability that the stock price is greater than a constant value, when the stock price follows a Log-normal distribution
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