Question

A bank money manager estimates that the bank will experience a liquidity deficit of $400 million with a probability of 10 percent, a liquidity deficit of $900 million with a probability of 20 percent, a liquidity surplus of $600 million with a probability of 30 percent, and a liquidity surplus of $1,200 with a probability of 40 percent over the next month. What is this bank's expected liquidity deficit or surplus next month?

A. $880 million liquidity surplus

B. $440 million liquidity deficit

C. $440 million liquidity surplus

D. $880 million liquidity deficit

E. None of the options is correct

Answer

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