Use the Information Below to Answer the Following Question(s)

question 45

Multiple Choice

Use the information below to answer the following question(s) . Below is a decision tree illustrating the R&D process for a new drug. Let us assume that if market is large, payoff is lognormally distributed with a mean of $4,900 million and a standard deviation of $1,000 million; if market is medium, payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if market is small, payoff is normally distributed with a mean of $1,800 million and standard deviation of
$200 million. Let us also assume that the cost of clinical trials is uncertain and estimates are modeled with a triangular distribution with a minimum of -$700 million, a most likely value of - $550 million, and a maximum of -$500 million. Use 10,000 trials and a random seed of 1.
-What is the mean absolute deviation obtained from the simulation results? [Hint: Choose the approximate value.]

• A) $ 119.0
• B) $ 116.1
• C) $ 105.7
• D) $ 94.0

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Definitions:

Self-Control

The ability to regulate one's emotions, thoughts, and behaviors in the face of temptations and impulses.

Conduct Disorder

A psychological condition identified during childhood or adolescence, marked by ongoing aggressive and disruptive actions.

Socioeconomic Classes

Categories of people grouped according to their economic, social, and work status, often influencing their access to resources and opportunities.

Depression

A mental health disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.