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

question 15

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 value of mode obtained from the simulation results? [Hint: Choose the approximate value.]

• A) $ 119.0
• B) $ 116.1
• C) $ 105.7
• D) $ 94.1

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Definitions:

Cholesterol Levels

Measurements of the total amount of cholesterol in the blood, including HDL (good) cholesterol and LDL (bad) cholesterol, important for assessing heart disease risk.

Arteries

Blood vessels that carry oxygenated blood away from the heart to the body's tissues.

Fasting

Voluntarily abstaining from all or some kinds of food or drink for a specified period.

Normal Range

The set of values that is considered typical or healthy for a specific measurement or test in the general population.