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CT6 Chapter 4 Q4.7 Truncated Lognormal Formula

M

mcallist

Member
Hi,

Could someone please help with this.
IN the CMP, chapter 4.7, we're asked to use the formula to find the mean and the variance of the lognormal distribution. Could someone please explain where the infinity and - infinity come from, step by step in the solution that's given.

I know it's a fairly stupid question, but I'm always thrown by when infinity is around.

Cheers,
Tom
 
Are you referring to question 4.7?

If so, then the bit that is probably causing grief is when you substitute into the formula:

For \(L=0\) we have:

\(L_1 = \frac{log0 - \mu}{\sigma} - \sigma = \frac{-\infty - \mu}{\sigma} - \sigma \rightarrow -\infty\)

For \(U\rightarrow \infty\) we have:

\(L_1 = \frac{log\infty - \mu}{\sigma} - \sigma = \frac{\infty - \mu}{\sigma} - \sigma \rightarrow \infty\)
 
Thanks John, yea, sorry meant Q 4.7. Perfect, that's what I was after. Cheers
 
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