
Explanation:
By definition, a random variable has a lognormal distribution if its natural logarithm has a normal distribution. For example, let’s say you have a lognormally distributed variable . If you take the logarithm of , you get . will be normally distributed.
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Q.1678 A model was constructed to estimate the dynamics for a lognormal model with deterministic drift. The function of the model (time-dependent) is:
In this equation, the short rate has a lognormal distribution. Considering this equation, what will be the distribution of a random variable if its natural logarithm has a normal distribution?
A
The random variable will be having a lognormal distribution if its natural logarithm has a normal distribution.
B
The random variable will be having a normal distribution if its natural logarithm has a normal distribution.
C
The random variable will be having a standard normal distribution if its natural logarithm has a normal distribution.
D
The random variable will be having an exponential distribution if its natural logarithm has a normal distribution.
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