Which of the following statements is LEAST accurate regarding the properties of lognormal distributions? A. Lognormal distributions are skewed to the right. B. Lognormal distributions are more often used than standard distributions to model asset prices. C. Lognormal distributions can take negative values.

The correct answer is C.Lognormal distributions are bounded by 0 because they cannot take negative values. Since normal distributions can take negative values, lognormal distributions are more suitable for describing distributions of asset prices.Exam Tip: If you have negative values, your data isn't lognormal.

CFA Level 1 Question Of The Week - Quantitative Methods (5) - CFA Level 1

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  11 May 2019 at 6:48 pm
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  The correct answer is C.
  
  Lognormal distributions are bounded by 0 because they cannot take negative values. Since normal distributions can take negative values, lognormal distributions are more suitable for describing distributions of asset prices.
  
  Exam Tip: If you have negative values, your data isn’t lognormal.
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