Investment Studio > Expressions > Functions > Statistical > LOGNORMDIST
float lognormdist(float x, float mean, float standard_deviation, boolean cumulative = TRUE)
Returns the lognormal probability function.
x must be > 0.
standard_deviation must be > 0.
If cumulative = TRUE, the CDF (Cumulative Distribution Function) is returned (equal to the probability that x is >= a stochastic variable with lognormal distribution); otherwise, the PDF (Probability Density Function) is returned.
lognormdist is equivalent to the expression
=normsdist((ln(x) - mean) / standard_deviation, cumulative)
Mathematically, the lognormal distribution is the distribution of a stochastic variable x such that ln(x) has a normal distribution. It's commonly used to model the lifetimes of objects subject to failure under stress, from mechanical systems to bacteria in a disinfectant (as opposed to objects with a constant failure rate, e.g. the nuclei of radioactive atoms, which are modelled with the exponential distribution).
In finance, it's often assumed that stock price moves are lognormally distributed.
Example
=lognormdist(3, 4, 2)
returns 0.0734325635957277.