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This quiz consists of 5 multiple choice and 5 short answer questions through At the Fed.

Multiple Choice Questions

1. What was the typical scenario for bond investors in 1994?
(a) Minimal gains.
(b) Few invested in bonds.
(c) Loss.
(d) Substantial gains.

2. In 1996, what was the second bank Long-Term approached about financing their credit?
(a) Union Bank of Switzerland.
(b) International Banking System.
(c) The Italian Republic of Banks.
(d) National Bank of Russia.

3. By the end of August 1998, what market had practically stopped trading altogether?
(a) Bond markets.
(b) International markets.
(c) Gold markets.
(d) Stock markets.

4. In order for Meriwether's Treasury futures investment to work, what did he need market prices to do?
(a) None of these.
(b) Remain the same.
(c) Fluctuate drastically.
(d) Converge.

5. Once in business, what did Long-Term have an easy time getting from banks?
(a) Workers.
(b) Money.
(c) Personal information.
(d) Endorsements.

Short Answer Questions

1. Who suspended arbitrage operations in April 1998?

2. In August 1998, how far down was Long-Term for the month?

3. To create a paired-share, what is common stock partnered with?

4. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?

5. What was the end result of Meriwether's Treasury bill deal?

(see the answer key)

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