Use the Information Below to Answer the Following Questions)

question 48

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

• A) $ 119.1
• B) $ 116.1
• C) $ 105.7
• D) $ 94.4

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Definitions:

Felony Prosecution

The legal process of charging and trying an individual accused of a felony, which is a serious crime usually punishable by imprisonment for more than one year or by death.

Preliminary Hearing

A preliminary hearing is a court proceeding where the judge determines whether there is sufficient evidence for the case to proceed to trial.

Information Route

The path or channel through which information is transmitted from one point to another.

Grand Jury

A body of citizens convened to consider whether there is sufficient evidence to indict someone suspected of a crime, functioning primarily in the U.S. legal system.