Long-Term Capital Got into Trouble When It Thought That the Spread

question 20

Multiple Choice

Long-Term Capital got into trouble when it thought that the spread between prices on long-term Treasury bonds and long-term corporate bonds was too ________, and bet that this "anomaly" would disappear and the spread would ________.

• A) high; narrow
• B) low; widen
• C) low; narrow
• D) high; widen

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Definitions:

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