Multiple Choice
Use the information below to answer the following question(s) .
Below is a decision tree illustrating the R&D process for a new drug.
![Use the information below to answer the following question(s) . Below is a decision tree illustrating the R&D process for a new drug. Let us assume that if the market is large, the payoff is lognormally distributed with a mean of $ 4,900 million and a standard deviation of $ 1,000 million; if the market is medium, the payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if the market is small, the payoff is normally distributed with a mean of $1,800 million and standard deviation of $200 million. -What is the mean absolute deviation obtained from the simulation results? [Hint: Choose the approximate value.] A) $ 119.0 B) $ 116.1 C) $ 105.7 D) $ 94.4](https://d2lvgg3v3hfg70.cloudfront.net/TB3611/11ea30b2_9220_8cd3_b0fd_07129c41a8a0_TB3611_00_TB3611_00_TB3611_00_TB3611_00_TB3611_00_TB3611_00.jpg)
Let us assume that if the market is large, the payoff is lognormally distributed with a mean of $ 4,900 million and a standard deviation of $ 1,000 million; if the market is medium, the payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if the market is small, the payoff is normally distributed with a mean of $1,800 million and standard deviation of $200 million.
![Use the information below to answer the following question(s) . Below is a decision tree illustrating the R&D process for a new drug. Let us assume that if the market is large, the payoff is lognormally distributed with a mean of $ 4,900 million and a standard deviation of $ 1,000 million; if the market is medium, the payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if the market is small, the payoff is normally distributed with a mean of $1,800 million and standard deviation of $200 million. -What is the mean absolute deviation obtained from the simulation results? [Hint: Choose the approximate value.] A) $ 119.0 B) $ 116.1 C) $ 105.7 D) $ 94.4](https://d2lvgg3v3hfg70.cloudfront.net/TB3611/11ea30b2_9220_8cd4_b0fd_f9bc14d36d69_TB3611_00_TB3611_00_TB3611_00_TB3611_00_TB3611_00_TB3611_00.jpg)
-What is the mean absolute deviation obtained from the simulation results? [Hint: Choose the approximate value.]
A) $ 119.0
B) $ 116.1
C) $ 105.7
D) $ 94.4
Correct Answer:
Verified
Correct Answer:
Verified
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