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This quiz consists of 5 multiple choice and 5 short answer questions through The Human Factor.

Multiple Choice Questions

1. What regulation did Long-Term bypass when trading equities?
(a) Regulation-E.
(b) Regulation-T.
(c) Regulation-C.
(d) Regulation-B.

2. What was the dollar amount of the premium Long-Term paid for its loan?
(a) $289 million.
(b) $1 billion.
(c) $100 million.
(d) $200 million.

3. In August 1998, how far down was Long-Term for the month?
(a) 44%.
(b) 60%.
(c) 10%.
(d) 25%.

4. What did Long-Term do with off-the-run bonds?
(a) Hold them for profit.
(b) Unload them quickly.
(c) Avoid them.
(d) Loan them to other firms.

5. What did the Fed Chairman want to remove in an effort to create liquidity in the market?
(a) Stock rules.
(b) Trading rules.
(c) Short rules.
(d) Margin rules.

Short Answer Questions

1. How did regulators respond to the involvement of banks in the derivatives market?

2. In bond trading, what are loans backed by collateral called?

3. In 1994, why did the yield raise on the thirty year Treasury bond?

4. What level of risk did Long-Term offer?

5. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?

(see the answer key)

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