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Basic Question 5 of 7
Which of the following statements is (are) incorrect?
II. If the logarithm of base ten of a random variable follows a normal distribution, then that random variable follows a lognormal distribution.
III. The lognormal distribution has a long right tail.
IV. The lognormal distribution is always bounded below by zero.
I. The lognormal distribution is always related to the normal distribution.
II. If the logarithm of base ten of a random variable follows a normal distribution, then that random variable follows a lognormal distribution.
III. The lognormal distribution has a long right tail.
IV. The lognormal distribution is always bounded below by zero.
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan | The base should be e and not 10. |
| dcfa | @danlan, I am not sure - I think the point is that the base is not important. |
| cleopatraliao | the base is important--natural logarithm is e base:) |
| ashish100 | damn i need to go hard at the gym after June 3rd. |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices when using continuously compounded asset returns
CFA® 2025 Level I Curriculum, Volume 1, Module 6.