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

Multiple Choice Questions

1. In 1996, what was the response of most of the banks in terms of offering credit financing to Long-Term?
(a) Competitive.
(b) Eager.
(c) Interested.
(d) Interested but wary.

2. What was the common belief regarding nuclear powers?
(a) They never default.
(b) They do not have capital.
(c) They always default.
(d) They are not stable.

3. What did Long-Term do with off-the-run bonds?
(a) Hold them for profit.
(b) Unload them quickly.
(c) Loan them to other firms.
(d) Avoid them.

4. Who became the temporary CEO of Meriwether's group when scandal hit?
(a) J.F. Salomon.
(b) John Meriwether.
(c) Paul Mozer.
(d) Warren Buffet.

5. How much did the accounts for investors increase in 1994?
(a) 50%.
(b) 20%.
(c) 5%.
(d) 10%.

Short Answer Questions

1. What factor was forcing those with hedge funds to sell?

2. What did Long-Term avoid by working with derivatives instead of stocks?

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

4. In 1996, who did Long-Term first approach to handle their credit?

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

(see the answer key)

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