Lognormal distribution

Definition:

Pattern of frequency of occurrence in which the logarithm of the variable follows a normal distribution. Lognormal distributions are used to describe returns calculated over periods of a year or more.

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Perfect hedge

A situation in which the profit and loss from the underlying asset and the hedge position are equal.

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