|Name: _________________________||Period: ___________________|
This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.
Short Answer Questions
1. How many banks stepped forward to help bail out Long-Term?
2. In its first bad year, what did Long-Term maintain?
3. What was the first horrible month Long-Term had?
4. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?
5. In a letter to clients, to what did Long-Term attribute the decrease in profits?
Short Essay Questions
1. Why did banks and investment banks get involved in the derivatives market?
2. What was the financial climate when Merton and Scholes were awarded the Nobel Prize?
3. Who was Jon Corzine?
4. What did the Fed determine would happen if Long-Term failed?
5. When did huge losses begin for Long-Term and why?
6. Following the crisis in Russia, what position did investors take that adversely affected Long-Term?
7. What strategy led to Long-Term's downfall during the Russian financial crisis?
8. What was the Fed's response to Long-Term's exposure?
9. In 1997, what was Meriwether encouraging his employees to do?
10. How much of Long-Term did the Union Bank of Switzerland buy on a hedge?
Write an essay for ONE of the following topics:
Essay Topic 1
The international market provided Long-Term with a substantial opportunity for success. Write an essay examining Long-Term's initial involvement in the international market and the results of this investment.
Essay Topic 2
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?
Essay Topic 3
Write a brief essay supporting or refuting the following statement, citing examples from the text: The irresponsible management of Long-Term by the partners led to its downfall.
This section contains 502 words
(approx. 2 pages at 300 words per page)