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

Multiple Choice Questions

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

2. What did Black and Scholes use to calculate market change?
(a) History.
(b) In depth financial patterns.
(c) Calculus and computer models.
(d) Meriwether's advice.

3. What did Long-Term expect foreign banks to invest?
(a) $1 million.
(b) $100 million.
(c) $10 million.
(d) Only individuals could invest.

4. How much of the face value of a bond do buyers typically pay?
(a) 1%.
(b) 25%.
(c) 15%.
(d) 10%.

5. Why did Long-Term trade in Italy?
(a) Meriwether was Italian.
(b) The opportunity for big returns.
(c) It was a safe market.
(d) The tax write-off opportunity.

Short Answer Questions

1. Who helped Meriwether raise money for Long-Term?

2. In 1994, why did the price of bonds drop?

3. How was Meriwether's career affected following the Treasury bill deal?

4. What did the traders accept about the financial models they used?

5. What was J.F. Eckstein & Co. primarily working on in 1979?

(see the answer key)

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