40. In the Geometric Brown Motion process for a variable S, I. S is normally distributed II. d ln(S) is normally distributed III. dS/S is normally distributed IV. S is lognormally distributed a. I only b. II, III and IV c. IV only d. III and IV To answer this question. I noted that: 1) Price levels are lognormally distributed 2) Price returns are normally distributed 3) If the log of a variable is normally distributed, then the variable is lognormally distributed So this helps me determined that lll and lV are part of the answer. But I don't understand why ll is part of the answer too. The answer explanation below mentions that dS/S is equal to dln(S). How is this? ANSWER: B In the Geometric Brownian Motion (GBM) process for variable S: dS = µ S dt + s S dz From the above relation it follows that dS/S, which is equal to d ln(S), is normally distributed, whereas S is lognormally distributed.