Use the Information for the Question(s)below

question 19

Multiple Choice

Use the information for the question(s) below.
Big Cure and Little Cure are both pharmaceutical companies.Big Cure presently has a potential "blockbuster" drug before the Food and Drug Administration (FDA) waiting for approval.If approved,Big Cure's blockbuster drug will produce $1 billion in net income for Big Cure.Little Cure has 10 separate less important drugs before the FDA waiting for approval.If approved,each of Little Cure's drugs would produce $100 million in net income for Little Cure.The probability of the FDA approving a drug is 50%.
-What is the standard deviation of Big Cure's average net income for their new blockbuster drug?

• A)$0
• B)$1 billion
• C)$100 million
• D)$500 million

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Definitions:

Overhead

General, ongoing business expenses not directly attributed to creating a product or service, including rent, utilities, and insurance.

Direct Labor

Labor costs that are directly attributed to the production of goods, including wages for workers who manufacture a product or perform a service.

Gross Profit

The difference between sales and the cost of goods sold, representing the profit from trading activities before deduction of overheads and other selling expenses.

First Quarter

This term refers to the first three months of a financial year; specifically, January, February, and March, used in fiscal and calendar year reporting.