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Appendix D. Application of the Log-Normal Distribution to the Pricing of Cal...
Appendix D. Application of the Log-Normal Distribution to the Pricing of Call Options
In Chapter 11, we described the log-normal distribution and applied it to the return distribution for a stock's price. In this appendix, we illustrate the application of this distribution to price a derivative instrument. More specifically, we illustrate an application to the pricing of a European call option.
