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 ten separate, less important drugs before the FDA waiting for approval. If approved, each of Little Cure's drugs would produce $50 million in net income. The probability of the FDA approving a drug is 50%. What is the expected payoff for Little Cure's ten drugs?
A) $250 million
B) $50 million
C) $1 billion
D) $0
Correct Answer:
Verified
Q83: Many former employees at AlphaEnergy, an energy
Q84: Independent risks can be diversified by holding
Q85: As we increase the number of stocks
Q86: Two slot machines offer to double your
Q87: Which of the following is NOT a
Q89: The risk premium of a stock is
Q90: In general, it is possible to eliminate
Q91: Big Cure and Little Cure are both
Q92: A stock whose return does not depend
Q93: A company's stock price dropped when it
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents