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Question
John Camey, the money manager of the First State Bank, has estimated that the bank has a 20 percent chance of a liquidity deficit of $700 million, a 30 percent chance of a liquidity deficit of $200 million, a 30 percent chance of a liquidity surplus of $400 million and a 20 percent chance of a liquidity surplus of $900 million over the next week. What is the bank's expected liquidity deficit or surplus over the next week?
A. $100 million liquidity surplus
B. $100 million liquidity deficit
C. $400 million liquidity surplus
D. $500 million liquidity surplus
E. $0 liquidity surplus
Answer
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