![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://scanned-questions.quizplus.com/1087723.webp)
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
Correct Answer:
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