Question 7-Suppose there are two pharmaceutical companies: A and B. Company A has a potential drug, which is waiting for approval from the Food and Drug Administration (FDA). If approved, this drug will produce $1 billion in net income for company A. Company B has 10 separate drugs waiting for FDA approval. If approved, each of these drugs would produce $100 million in net income. The probability of the FDA approving a drug is 50%. Which pharmaceutical company faces less risk and why? Select one: O a. Company B as its standard deviation of net income is $15.8 million which is lower than Company A's standard deviation of net income b. Company B as its standard deviation of net income is $50 million which is lower than Company A's standard deviation of net income O c. Company A and Company B face exactly the same risk as their standard deviation of net income is the same O d. Company B as its standard deviation of net income is $158.1 million which is lower than Company A's standard deviation of net income O e. Company A as its standard deviation of net income is $500 million which lower than Company B's standard deviation of net income Of. Company A as its standard deviation of net income is $50 million which is lower Question 1: Which of the following statements is TRUE? Select one: O a. Volatility seems to be a reasonable measure of risk when evaluating returns on individual stocks. O b. Volatility seems to be a reasonable measure of risk when evaluating returns on large portfolios. O c. Individual stocks with higher volatility have consistently rewarded investors with higher average returns. O d. Portfolios with lower volatility have historically rewarded investors with higher average returns