Hot answers tagged modeling
Number one, the central limit theorem means a lot of things that may not be normal end up looking normal when lots of little 'experiments' or impacts are added up. Number 2, when dealing with finance you need a model that seems plausible. An arithmetic Brownian motion could go negative, but stock prices can't. On the other hand, it seems quite plausible ...
Only top voted, non community-wiki answers of a minimum length are eligible