|Name: _________________________||Period: ___________________|
This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.
Short Answer Questions
1. Where did the private contracts Long-Term made in 1998 trade?
2. What was the climate at Long-Term during the Russian financial crisis?
3. When the Fed visited Long-Term, what did Hilibrand show them?
4. During the financial crisis in 1998, what did the partners keep from the workers?
5. When Russia began to default on its loans, what did people start doing with their high risk bonds?
Short Essay Questions
1. When did huge losses begin for Long-Term and why?
2. What contributes to the estimation of market volatility?
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. What strategy led to Long-Term's downfall during the Russian financial crisis?
6. Why did banks and investment banks get involved in the derivatives market?
7. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?
8. Since Long-Term expected stock prices would fall, what did they sell insurance against?
9. What was the Fed's response to Long-Term's exposure?
10. Following the financial crisis in Russia, what did the partners do to begin raising money?
Write an essay for ONE of the following topics:
Essay Topic 1
Basing your answer on the height of Long-Term's career, compare and contrast several of the companies on Wall Street with Long-Term, citing examples from the text.
Essay Topic 2
Write a brief essay supporting or refuting the following statement, citing examples from the text: Meriwether fully expected to continue making substantial returns with Long-Term's investment model.
Essay Topic 3
When Long-Term was faced with financial turmoil, it took only five weeks for it to lose staggering amounts of money. Examine the following points:
1) What was the financial profile of Long-Term prior to Russia's debt default?
2) What did the financial profile change so drastically?
3) What moves did Long-Term make to correct the situation and why were they ineffective?
This section contains 490 words
(approx. 2 pages at 300 words per page)