Explain carefully why a distribution with a heavier left tail and less heavy right tail than the lognormal distribution gives rise to a downward sloping volatility smile ...

The heavier left tail should lead to high prices and therefore high ...

Explain carefully why a distribution with a heavier left tail and less heavy right tail than the

Question:

Explain carefully why a with a heavier left tail and less heavy right tail than the lognormal gives rise to a downward sloping volatility smile.
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...