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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. What regulation did Long-Term bypass when trading equities?
(a) Regulation-C.
(b) Regulation-B.
(c) Regulation-T.
(d) Regulation-E.

2. What are some of the new markets Long-Term looked into in 1997?
(a) Equities.
(b) Paired-shares.
(c) Stocks.
(d) All of these.

3. In 1998, Long-Term expected prices to do what?
(a) Rise.
(b) Fall.
(c) Stay the same.
(d) Fluctuate.

4. In 1997, who awarded Long-Term the loan warrant it had requested?
(a) The Cayman Islands Commons.
(b) Bank of America.
(c) Chase.
(d) Union Bank of Switzerland.

5. After the first bad year experienced by Long-Term, what did its overall record look like?
(a) Fantastic.
(b) Mediocre.
(c) Typical.
(d) Terrible.

Short Answer Questions

1. What was the leverage of Long-Term, following its meeting with the Fed?

2. In 1998, what type of contracts did Long-Term make with private entities?

3. What was the internal climate at Long-Term in 1998?

4. What did Long-Term risk losing if they allowed their assets to fall below five hundred million dollars?

5. What was the dollar amount of the premium Long-Term paid for its loan?

Short Essay Questions

1. When did huge losses begin for Long-Term and why?

2. What did Long-Term do when they expected stock prices to fall?

3. During the financial crisis in 1998, where were the partners finding money?

4. In spite of the economic crisis in Russia, what did Meriwether believe about Long-Term's trades?

5. By the end of August 1998, what did the movement in the bond market look like?

6. What did the Fed determine would happen if Long-Term failed?

7. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?

8. What contributes to the estimation of market volatility?

9. In terms of the spreads in 1998, what was the difference between what Long-Term expected them to do and what they actually did?

10. Why did the issue in Russia cost Long-Term money on an initial basis?

(see the answer keys)

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