just did the CFAI Study Session 3, Reading 9 EOC question 20 which asked about wether asset prices and returns are normal/lognormal distributed.
There is no question about lognormal distributed asset prices because of the abscence of negative prices.
The answer says also that “A normal distribution is suitable for describing asset returns.” (I hope, citing that one sentence is allowed…). In my opinion this is not true. A normal distribution of returns allows returns to be under -100% which would lead to negative asset prices. Therefore, a lognormal distribution should be appropriate.
I also attended a risk management course at university where we learned that “asset returns are lognormal distributed and asset logreturns are normal distributed”.
What is your take on that?