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This quiz consists of 5 multiple choice and 5 short answer questions through Epilogue.

Multiple Choice Questions

1. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?
(a) Exceptional trades.
(b) Short term trades.
(c) Scientific trades.
(d) Long range trades.

2. What put pressure on the currency in Brazil?
(a) The United State balanced the budget.
(b) Goldman's bought out China's debt.
(c) Warren Buffet paid off Brazilian debt.
(d) Moody's downgraded Brazilian debt.

3. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?
(a) The market did not have enough players.
(b) The market was over-saturated.
(c) It was illegal to perform these trades.
(d) Long-Term did not have investment capital.

4. What company did Meriwether launch following Long-Term?
(a) Morgan Stanley.
(b) JWM.
(c) Chase Morgan.
(d) KJC.

5. When Russia began to default on its loans, what did people start doing with their high risk bonds?
(a) Buying.
(b) Trading.
(c) Selling.
(d) Holding.

Short Answer Questions

1. What type of government paper was bought in Italy?

2. Who suspended arbitrage operations in April 1998?

3. In the year following the bailout, what did the partners do?

4. When Meriwether increased his position in Treasury futures, what did he expect the market to do?

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

(see the answer key)

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