- CFA Exams
- CFA Exam: Level I 2021
- Study Session 3. Quantitative Methods (2)
- Reading 9. Common Probability Distributions
- Subject 10. The Lognormal Distribution

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**CFA Practice Question**

Compared to a normal distribution, a lognormal distribution is

B. skewed to the right

C. useful in describing the distribution of stock prices

*least likely*to be ______.A. skewed to the left

B. skewed to the right

C. useful in describing the distribution of stock prices

Correct Answer: A

The lognormal distribution is bounded by zero and thus skewed to the right. The lognormal distribution is a good fit for stock prices as stock prices can not fall below zero.

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