Use the Poisson Model to Approximate the Probability

question 30

Multiple Choice

Use the Poisson model to approximate the probability. Round your answer to four decimal places.
-Suppose the probability of a major earthquake on a given day is 1 out of 11,000. Use the Poisson distribution to approximate the probability that there will be at least one major earthquake in the next 2000 days.

• A) 0.1516
• B) 0.1662
• C) 0.8484
• D) 0.0147
• E) 0.8338

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Definitions:

Transitory Earnings Component

The part of earnings believed to be temporary or non-recurring and not indicative of the company's ongoing financial performance.

Permanent Earnings

The portion of a company's income considered to be sustainable and repeatable, excluding one-time events or accounting anomalies.

Continuing Operations

Parts of a business expected to continue operating and contributing to earnings over the long term, excluding any discontinued operations.

Discount Rate

The interest rate used to discount future cash flows of an investment to their present value, thereby assessing its attractiveness.