Use the Information for the Question(s)below

question 35

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%.
-Which of the following types of risk doesn't belong?

• A)Market risk
• B)Unique risk
• C)Idiosyncratic risk
• D)Unsystematic risk

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Definitions:

Accrued Loss

Refers to a loss that has occurred but has not yet been recorded in the accounting records through the date of the financial statements.

Purchase Commitments

Agreements to buy goods or services at a predetermined price, often specifying quantity and delivery dates.

Gross Profit Method

This is an accounting technique used to estimate inventory value, calculating gross margin as a percentage of sales to find the cost of goods sold and ending inventory.