Financial Risk Manager Part 1

Lognormal distributions are indeed skewed to the right and are frequently used to model asset prices. The reason for this is that lognormal distributions are bound by zero on the left side, which means they cannot take negative values. This characteristic makes them particularly suitable for modeling asset prices, as these prices also cannot take negative values. Furthermore, the right skewness of lognormal distributions allows them to capture the potential for large positive returns, which is a feature often observed in asset prices. Therefore, lognormal distributions are a popular choice in finance for modeling asset prices.

Choice A is incorrect. The Lognormal Distribution is not skewed to the left, but rather to the right. Furthermore, it is frequently used in financial modeling for asset prices due to its properties of non-negativity and skewness.

Choice B is incorrect. While it's true that the Lognormal Distribution is often used to model asset prices, this distribution isn't skewed to the left as stated in this option. It's actually skewed to the right.

Choice D is incorrect. This statement incorrectly suggests that Lognormal Distribution isn't commonly used for modeling asset prices and that it's skewed towards the right side which contradicts with its frequent usage in financial modeling due to its beneficial properties such as non-negativity and skewness towards right.