Lognormal distribution and asset returns

[chanhoke]

Hi,

I would like to know if I've interpreted Lognormal distributions readings correctly so was wondering if you could confirm whether i'm right or wrong here?

1) if Log asset returns are normal then (non-log) asset prices are lognormal

2) if (non-log) asset returns are normal then the log of asset prices are lognormal

thanks and your help is much appreciated

 

[ShaktiRathore]

Hi
If asset returns are normal then asset prices are lognormal. Ln(S)=r where r is the asset return and S is asset price ,if log of something like asset prices S here is normal then that thing inside the log(asset prices) is lognormal. If r is normally distributed in above equation then S is said to be lognormally distributed.
Thanks

 

[chanhoke]

Hi ShaktiRathore,

thanks for your help. I forgot that ln (S) = returns. Now this is clear to me.