Use the Information for the Question(s)below

question 17

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 Therapeutic Goods Administration (TGA) 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 TGA 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 TGA approving a drug is 50%.
-What is the expected payoff for Big Cure's blockbuster drug?

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

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Definitions:

SSE

Sum of Squared Errors, a measure used in statistics to describe the amount by which the observations differ from their mean value.

Gas Brand

A company that sells gasoline to consumers, often associated with a particular type of fuel or level of service.

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A classification for automobiles that distinguishes them based on characteristics like body style, size, and utility.

Car Type SS

Refers to a specific classification or model of a vehicle, often implying a designation for performance or body style.