Question
Two large corporations, Corporation A and Corporation B, are planning to merge. The standard deviation of profit for Corporation A is $2.5 million while the
Two large corporations, Corporation A and Corporation B, are planning to merge. The standard deviation of profit for Corporation A is $2.5 million while the standard deviation of annual profit for Corporation B is $8.7 million. Let A = the total annual profit for Corporation A in a randomly selected year and B = the total annual profit for Corporation B in a randomly selected year. Assuming A and B are independent, which of the following is correct?
I. If S = A - B, then the difference in the amount earned for each corporation in a randomly selected year typically differs by about $8.33 million from the mean. II. If S = A + B, then the sum of the amount earned for each corporation in a randomly selected year typically differs by about $9.05 million from the mean. III. If S = A + B, then the sum of the amount earned for each corporation in a randomly selected year typically differs by about $11.2 million from the mean.
Group of answer choices
1. II only
2. I only
3. I and II
4. I and III
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