Future stock prices are assumed to follow a lognormal distribution.
In contrast, stock returns are modeled using a normal distribution (Hull 2016, 294).
See Mathematics for the connection between normal and lognormal distributions.
Future stock prices are assumed to follow a lognormal distribution.
In contrast, stock returns are modeled using a normal distribution (Hull 2016, 294).
See Mathematics for the connection between normal and lognormal distributions.