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Lognormal distribution

P

padasala

Ton up Member
Hi,

Some questions use the mean that is provided in the question while some questions derive the parameter using e^(u + 0.5sigma).

Can you explain when we need to use the conversion and when we can use it as is in the question?
 
It depends on the question.

If you are given the value of mean then use it.
If you are given value of mu you need to derive the value of mean.

NB: mu is not the mean of a lognormal random variable
 
If you are given value of mu you need to derive the value of mean.
Click to expand...

Conversely, if a question gives you the mean (and variance) of the lognormal distribution, then you can use the formulae on page 14 of the Tables to work out the value of the parameters mu and sigma.

NB: mu is not the mean of a lognormal random variable
Click to expand...

Further - sigma squared is not the variance of a lognormal random variable.
 
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