You have chosen biology as your college major because you would like to be a med

Question

You have chosen biology as your college major because you would like to be a medical doctor. However, you find that the probability of being accepted into medical school is about 10 percent. If you are accepted into medical school, then your starting salary when you graduate will be $300,000 per year. However, if you are not accepted, then you would choose to work in a zoo, where you will earn $40,000 per year. Without considering the additional educational years or the time value of money, what is your expected starting salary as well as the standard deviation of that starting salary?

Expected Salary $42,000; Standard Deviation $81,000

" " $54,000 " " $78,000

" " $66,000 " " $78,000

None of the above

Explanation / Answer

$66,000

Standard Deviation is $78,000

Expected Salary Medical $300,000 Zoo $40,000 Probability Medical 10% Zoo 90% Expected Salary = Salary of Medical *Probability + Salary of Zoo*Probability

$66,000

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