standard deviation

Question

country a annual exports to country b are $3.2bilion on average with standard deviation of 0.28 billion. country a annual imports to country b are $3.5 bilion on average with standard deviation of 0.24 billion. Calculate the standard deviation of country a balance of trade with country b (that is exports - imports). 

Answer 1

assuming independence of imports and exports, calculate the variance first

 

var (Export - Import) = var (export) + Var (Import)    [ yes, +, not -]

                               = 0.28^2 + 0.24 ^2

 

Then, SD (Export - Import)  = sqrt [ var (Export - Import) ]