|Name: _________________________||Period: ___________________|
This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.
Multiple Choice Questions
1. Michael Steindardt believed what was the "culprit in 1994"?
(b) Foolish investments.
2. What type of strategy did Long-Term employ?
(a) Moderate risk.
(b) Whatever was dictated by the market.
(c) Low risk.
(d) High risk.
3. What models did Long-Term follow?
(d) All of these.
4. Where were Italian bonds sold by Long-Term?
(a) Directly to investors.
(c) Cayman Islands.
(d) Under the table.
5. Who developed the Black-Scholes model?
(a) David Black.
(b) Jack Salomon.
(c) Myron Scholes.
(d) John Meriwether.
Short Answer Questions
1. What group did Meriwether found in 1977?
2. What did Meriwether do with his staff?
3. In the 1970's, what type of trading was considered dull?
4. What did the Black-Scholes model believe was constant?
5. What did banks and investors want from Long-Term?
Short Essay Questions
1. Why was it difficult to know the exact amount of assets Long-Term held?
2. Why was the investment in Italy a risky one for Long-Term to make?
3. Although Long-Term was performing so well by 1996, how many Americans knew of the fund's existence?
4. In 1996, which significant companies did Long-Term surpass in terms of assets?
5. When did Meriwether begin making sales calls for Long-Term?
6. Why did Meriwether increase his position on Treasury Bill futures in spite of the market fluctuation?
7. Why are hedge funds considered low risk?
8. What were the legal limits on hedge fund investors?
9. How would a loan from a major bank help the partners at Long-Term make money?
10. What methods did Black and Scholes use to predict the changes that would take place in the market?
This section contains 498 words
(approx. 2 pages at 300 words per page)