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:

Sales

The revenues earned from selling goods or services over a period of time.

Preferred Stock Dividends

Dividends paid on preferred shares of a company which typically have a fixed dividend rate and priority over common stock in dividend payments.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Operating Profits

Earnings before interest and tax (EBIT), which is the profit from a business's core operations excluding financing costs and taxes.