Quantitative Finance：Lognormal Returns

先跟大家分享這篇英文的解說，內容有兩個影音檔的教學大家可以參考。

後續會再補上基礎統計的觀念

http://financetrain.com/why-use-lognormal-returns-in-finance-stock-prices/

Why Use Lognormal Returns in Finance (Stock Prices)?

Posted on August 19, 2012 by Manish 

The logarithm of a number is the exponent by which another fixed value, the base, has to be raised to produce that number. For example, the logarithm of 100 to base 10 is 2, because 100 is 10 to the power 2: 100 = 10 × 10 = 10². More generally, if x = b^y, then y is the logarithm of x to base b, and is written y = log_b(x), so log₁₀(100) = 2.

The inverse of a logarithmic function is an exponential functions.  

Logarithms play a significant role in quantitative finance. If we use a base of natural e, we can compute continuously compounded returns.

影音檔的教學

The first video below provides an intuitive explanation of the concept of logarithms.

The video below discusses why we use log returns in finance.