LOGNORM.DIST Function
Calculates the cumulative log-normal distribution function at a given value of x
Calculates the cumulative log-normal distribution function at a given value of x
The LOGNORM.DIST Function is categorized under Statistical functions. It will calculate the cumulative lognormal distribution function at a given value of x. We can use the function to analyze data that‘s been logarithmically transformed.
A variable x is log-normally distributed if its natural logarithm is normally distributed.
In terms of Excel functions:
Where μ is the mean of ln(x) and σ is the standard deviation of ln(x).
In financial analysis, the LOGNORM.DIST function is often used in analyzing stock prices as normal distribution cannot be used to model stock prices. The normal distribution includes a negative side and stock prices cannot fall below zero.
Also, the function is useful in pricing options. The Black-Scholes model uses the lognormal distribution as its basis to determine option prices.
=LOGNORM.DIST(x,mean,standard_dev,cumulative)
The LOGNORM.DIST function uses the following arguments:
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To understand the uses of the LOGNORM.DIST function, let us consider an example:
Suppose we are given the following data:
The formula for calculating cumulative lognormal distribution is shown below:
We get the result below:
The formula for calculating probability lognormal distribution is shown below:
We get the result below:
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