Use the Information Below to Answer the Following Questions)

question 7

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 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:

Demographic Variables

Characteristic factors used to segment populations for study, including age, gender, income level, race, employment, and others, to analyze changes or differences within a group.

Child Support Payments

Financial contributions that a noncustodial parent is required to make to support their children's living expenses.

Deadbeat Parents

Refers to parents who willfully neglect their financial responsibilities to their children, often failing to provide necessary support.

Court Order

A formal statement issued by a court that requires a person or entity to do or not do specific things.