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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) Loss.
(b) Substantial gains.
(c) Few invested in bonds.
(d) Minimal gains.

2. What did Meriwether warn his investors against in 1994?
(a) Further growth.
(b) His early retirement.
(c) Not investing enough with Long-Term.
(d) A repeat performance.

3. What did the Black-Scholes model believe was constant?
(a) Volatility.
(b) Income.
(c) Meriwether's enthusiasm.
(d) Growth.

4. What models did Long-Term follow?
(a) Black-Scholes.
(b) Value-at-Risk.
(c) Merton.
(d) All of these.

5. What did Meriwether do with his staff?
(a) Travel.
(b) All of these.
(c) Play golf.
(d) Dine.

Short Answer Questions

1. What did a dealer from J.F. Eckstein & Co. want from Meriwether in 1979?

2. How long did Long-Term expect their investors to commit?

3. What affected bond trading in the 1970's?

4. What type of strategy did Long-Term employ?

5. What did Black and Scholes use to calculate market change?

(see the answer key)

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