Using a normal distribution to model asset prices is a good approximation for low volatilities or short

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Using a normal distribution to model asset prices is a good approximation for low volatilities or short time horizons. What is the weakness of using a normal distribution to model asset prices for higher volatilities and longer time horizons?

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Mathematical Interest Theory

ISBN: 9781470465681

3rd Edition

Authors: Leslie Jane, James Daniel, Federer Vaaler

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Posted Date: Apr 02, 2024 05:02 AM

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Using a normal distribution to model asset prices is a good approximation for low volatilities or short

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Using a normal distribution to model asset prices assumes that the distribution of returns is symmet... View the full answer

Mathematical Interest Theory

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