Question about Spawn/Loot Probability.

[diplo]

Just want to figure out if my interpretation of the math is correct.

Example
Mob A - 2% chance to spawn every 30 minutes.
Loot - Common (88%), Rare (10%), Ultra Rare (2%).

Does this mean that right before the PH/named spawn, the system does a /random and lets say #1 & 2 will spawn the named, and 3-100 will spawn the ph? Then in order to calculate his loot, it then does another /random and (#1 & 2) will give him his ultra rare? So (.02)x(.02) will give you a 0.04% chance that you'll end up getting your ultra rare item ?