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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.
Multiple Choice Questions
1. In August 1998, how far down was Long-Term for the year-to-date?
(a) 2%.
(b) 52%.
(c) 10%.
(d) 35%.
2. What was the result for some banks due to their involvement in the derivatives market?
(a) They were nationally recognized.
(b) They went bankrupt.
(c) They were prosecuted.
(d) They made billions.
3. What was the first horrible month Long-Term had?
(a) June, 1998.
(b) July, 1998.
(c) August, 1998.
(d) It never had a horrible month.
4. Who was the Fed Chairman in 1997?
(a) Madeleine Albright.
(b) Hillary Clinton.
(c) Warren Buffet.
(d) Alan Greenspan.
5. In 1998, what market did Long-Term bet would decline?
(a) The Asian market.
(b) The Russian market.
(c) The Latin market.
(d) The U.S. market.
Short Answer Questions
1. What was the dollar amount of the premium Long-Term paid for its loan?
2. By the end of August 1998, what market had practically stopped trading altogether?
3. What typically happens to stock prices when a merger is revealed?
4. How many banks stepped forward to help bail out Long-Term?
5. When Russia began to default on its loans, what did people start doing with their high risk bonds?
Short Essay Questions
1. Why did banks and investment banks get involved in the derivatives market?
2. How much of Long-Term did the Union Bank of Switzerland buy on a hedge?
3. What move did Salomon make that surprised Long-Term?
4. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?
5. Who was Jon Corzine?
6. Since Long-Term expected stock prices would fall, what did they sell insurance against?
7. What contributes to the estimation of market volatility?
8. When did huge losses begin for Long-Term and why?
9. What was the Fed's response to Long-Term's exposure?
10. Who warned Long-Term about making trades that counted on falling stock prices?
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This section contains 433 words (approx. 2 pages at 300 words per page) |
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