Use the Information for the Question(s)below

question 43

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%.
-The standard deviation of Little Cure's average net income for their ten new drugs is closest to:

• A)$50 million.
• B)$25 million.
• C)$16 million.
• D)$500 million.

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Definitions:

Operating Expenses

Expenses incurred during the ordinary course of business operations, including costs related to sales, administration, and general activities.

Net Income

The remaining revenue after all costs, expenses, and taxes have been subtracted from a company's total revenue; essentially, a company's profit.

Periodic Inventory

An inventory system in which the inventory count is conducted at specific periods, determining the cost of goods sold by beginning inventory plus purchases minus ending inventory.

Merchandise Inventory

Goods a company intends to sell to customers that are stored as inventory.