The Tread Life of Tires Mounted on Light-Duty Trucks Follows

question 27

Multiple Choice

The tread life of tires mounted on light-duty trucks follows the normal probability distribution with a population mean of 60,000 miles and a population standard deviation of 4,000 miles. Suppose you bought a set of four tires; what is the likelihood the mean tire life of these four tires is more than 66,000 miles?

• A)0.0013
• B)0.9987
• C)0.4987
• D)0.9544

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Definitions:

Equity Method

An accounting approach used to assess the investment in another company, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of net assets and recorded earnings of the investee.

Impairment Test

An examination to determine if an asset's carrying amount exceeds its recoverable amount, and if so, to measure the amount of impairment loss.

Book Value

A financial measurement that calculates the value of a firm's equity as it appears on the balance sheet by subtracting liabilities from assets.

Fair Value

The estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.