Suppose That the Manager of a Company Has Estimated the Probability

question 21

Multiple Choice

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next five years that will disrupt all suppliers as 0.23%.In addition,the firm currently uses three suppliers for its main component,and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next five years to be 1.4%.What is the probability that all three suppliers will be disrupted at the same time at some point during the next five years?

• A)4.4203%
• B)0.2300%
• C)4.4300%
• D)0.2297%
• E)0.2303%

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Definitions:

Municipal Bonds

Debt securities issued by municipalities or local governments to finance public projects, typically offering tax-exempt interest payments to investors.

Permanent Difference

Refers to the discrepancy between book income and tax income that arises from certain items being recognized in either financial accounting or tax accounting, but not in both, leading to a difference that does not reverse over time.

Interperiod Tax Allocation

A method used in accounting to distribute income taxes over different periods due to temporary timing differences between when items are recognized for financial reporting and tax purposes.

Intraperiod Tax Allocation

The allocation of tax expense or benefit among different components of comprehensive income, such as operating income and other comprehensive income.