Solution

This is a bit of a trick question. Its purpose is to emphasize to you the general applicability of formula [3]. To solve the problem, recognize that Z = A + B. You know the standard deviations and correlation of A and B, so you can directly apply [3] to obtain a standard deviation for Z. The result is 4.74. The information that B = A2 – 2A – 4 is irrelevant.

[Return]

Ads by Contingency Analysis  

Advertise on this site

 

Disclaimer

website: http://www.contingencyanalysis.com
glossary direct link: http://www.riskglossary.com
copyright © Contingency Analysis, 2006