Find the mean of the lognormal variable if the mean and standard deviation of the underlying normal variable are 2 and 0.8, respectively.
A) 0.69
B) 2.32
C) 10.18
D) 11.02

Question

Quizplus · Accepted Answer

The mean of a lognormal distribution, given the mean ($\mu$) and standard deviation ($\sigma$) of the underlying normal distribution, is calculated using the formula: $\exp(\mu + \frac{\sigma^2}{2})$. Substituting $\mu = 2$ and $\sigma = 0.8$ into the formula gives $\exp(2 + \frac{0.8^2}{2}) = \exp(2 + 0.32) = \exp(2.32) \approx 10.18$.

Find the Mean of the Lognormal Variable If the Mean