4. determine how often a loss is likely to occur every year (aro) this is the annualized rate of occurrence. some aro’s are greater than one. snowstorms will occur in colorado many times per year. other things occur far less often. sometimes internal or external factors can affect that assessment

Garrett is an executive vice president at samm hardware. he researches a proposal by a larger company, maximum hardware, to combine the two companies. by analyzing past performance, conducting focus groups, and interviewing maximum employees, garrett concludes that maximum has poor profit margins, sells shoddy merchandise, and treats customers poorly. what actions should garrett and samm hardware take? a. turn down the acquisition offer and prepare to resist a hostile takeover. b. attempt a friendly merger and use managerial hubris to improve results at maximum. c. welcome the acquisition and use knowledge transfer to impart sam hardware's management practices. d. do nothing; the two companies cannot combine without samm hardware's explicit consent.