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This quiz consists of 5 multiple choice and 5 short answer questions through The Human Factor.

Multiple Choice Questions

1. In a letter to clients, to what did Long-Term attribute the decrease in profits?
(a) Irresponsibility in foreign nations.
(b) Poor margins.
(c) Widening spreads.
(d) Foolish investments.

2. What award did Merton and Scholes win for economics?
(a) None of these.
(b) The Wall Street Trust.
(c) The Academy Award.
(d) The Nobel Prize.

3. What did Long-Term do with off-the-run bonds?
(a) Hold them for profit.
(b) Loan them to other firms.
(c) Avoid them.
(d) Unload them quickly.

4. During the turmoil of 1998, investors avoided Long-Term because they were trying to avoid what?
(a) Scientific trades.
(b) Long range trades.
(c) Exceptional trades.
(d) Short term trades.

5. What was the result for some banks due to their involvement in the derivatives market?
(a) They were prosecuted.
(b) They made billions.
(c) They went bankrupt.
(d) They were nationally recognized.

Short Answer Questions

1. Michael Steindardt believed what was the "culprit in 1994"?

2. In 1996, why was it difficult to continue to find strong profits in arbitrage trades?

3. To create a paired-share, what is common stock partnered with?

4. What did Long-Term avoid by working with derivatives instead of stocks?

5. In August 1998, how far down was Long-Term for the year-to-date?

(see the answer key)

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