Use the Information Below to Answer the Following Questions)

question 17

Multiple Choice

Use the information below to answer the following questions) . 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 coefficiIIt of variation obtained from the simulation results? [Hint: Choose the approximate value.]

• A) 1.587
• B) 1.122
• C) 2.015
• D) 1.890

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Definitions:

Surgical Destruction

The intentional removal or damage of body tissue or organs during surgery for therapeutic purposes.

Brain Tissue

The soft, complex tissues that comprise the brain, responsible for processing information, controlling body functions, and facilitating cognition.

Endocrine System

A network of glands in the body that produce hormones, which regulate processes such as growth, metabolism, and reproductive function.

Ovaries

Female reproductive organs in which ova or eggs are produced, part of the vertebrate female reproductive system.