The role of the normal distribution in the valuation of financial assets
Keywords:
Normal distribution, financial assets, valuation, risk measurement, return prediction, Black-Scholes modelAbstract
The normal distribution is used to model random distributions of prices and returns in financial markets. It facilitates the analysis of price changes and logarithmic returns of stocks. The normal distribution is the basis of pricing models such as the Black-Scholes model and is essential for measuring risk and predicting returns. It helps investors determine market gains and losses, and improves risk management and market forecasts.References
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