A resource for the Professional Risk Manager (PRM) exam candidate. Sample PRM exam questions, Excel models, discussion forum and more for the risk professional.
You need to know the basics of log operations. Here is a quick refresherRemember the basics: If ePOWER = NUMBER, then POWER = LN(NUMBER) and EXP(POWER) = NUMBER
LN and EXP are both Excel functions. LN is the same as LOG, except that it is to the base e. (ie, LN(x) = LOGe(x) ).
Basic operations:Adding logarithms is like multiplying numbers, and subtracting logs is like dividing numbers.loga(mn)=loga(m) + loga(n)loga(m/n)=loga(m) - loga(n)Also,loga(xy )= y loga(x)
Converting log bases:
If we know the log of a number in a particular base, we can convert it to another log base quite easily.
If x = loga(m)Then x = logb(m)/logb(a)
What are logs useful for in finance?
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